The Jobless Expansion Continues

Friday's payroll numbers helped to tank the US equity markets by day's end, resulting in a 3.4% drop in the S&P500 Index.

After stripping out government-created census jobs, I believe the net private sector jobs created was about 41,000. Positive, but pathetically anemic for this point in a recovery which is allegedly over a year old. For comparison, the same data items for March and April were 158,000 and 218,000, respectively.

The administration hustled out various people, including the president, to excuse, explain and otherwise try to minimize the ugly May payroll numbers.

Is it possible that the coming tax increases are beginning to show their consequence in employment data? Could the cumulation of health care taxes, higher payroll taxes and the inclusion of payroll taxes on dividends and profits which small businesses operating as entities which file through 1040 forms will experience, be causing a drag on hiring?

I guess time will tell. But with each passing month, the gap between the available US labor force and the employment base grows larger. Pundits hopefully suggest that inventory restocking and foreign demand will surely, eventually require more US workers.

Yesterday morning, Morgan Stanley senior executive and economist Stephen Roach admitted, on CNBC, that a double-dip recession could occur. He bluntly said the inventory builds were merely the result of stimulus-fed business spending.

For how long can the US have both expanding business profitability and stagnant or anemic employment growth? And can this combination, in the long run, deliver a healthy US economy?