Friday’s labor-market report for April showed employers continue to add jobs, albeit at a slower pace. Most notable was that more than half of the new jobs last month were in government, healthcare and social assistance. Government spending is conjuring job growth, but they aren’t the kind that add to long-term productivity growth.
All of this suggests an easing labor market, which is why stock prices jumped. Markets are betting that a slowing economy will spur the Federal Reserve to cut interest rates sooner rather than later. Maybe. But there’s still plenty of fiscal stimulus coursing through the economy, which is evident by the boom in jobs that depend on government spending
Government, healthcare and social assistance accounted for about 95,000 of last month’s new jobs. Over the last year these industries have made up nearly 60% of the country’s 2.8 million in job growth. They made up less than 30% of the new jobs during the first three years of the Trump Presidency before the pandemic.