In May, the unemployment rate rose to 9.1 percent. The economy
added only 54,000 jobs, much fewer than the 300,000 that the
economy requires each month to make a dent in that rate. Even
the better April figure (222,000 new jobs) did not match what
was necessary. After two years of recovery, why are the job
numbers so weak? Each month when the numbers disappoint and
unemployment insurance applications rise, commentators talk
about the weather, rising oil prices, an earthquake abroad, or a
holiday at home. But man made and natural road bumps happen all
of the time. Clearly, something else is going on that eludes the
continually surprised economists and commentators. The nation’s
pattern of job growth over the past 20 years offers clues. We
can divide the economy into tradable and nontradable sectors.
The tradable sector consists of the goods and services that can
be produced in one country and consumed in another (autos,
computers, wheat). It is subject to fierce international
competition. Activities in the non