The S&P 500 suffered its second down week on lingering concerns over the disappointing March nonfarm payrolls report. The weak employment data has some wondering if the economy is heading for another soft patch.
Investors have been reminded of how fragile the U.S. economy and a domestic recovery really are.
“While the labor market is improving, it’s improving from a very low base at an agonizingly slow pace. In addition, there is some evidence that the labor market has structural problems that may prove to be a drag on growth for some time,” Russ Koesterich, CFA, wrote on the iShares blog. [Stock ETFs Knocked by Weak Jobs Data]
Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said. The prior week’s figure was revised up to 367,000 from the previously reported 357,000. Economists polled by Reuters had forecast claims falling to 355,000 last week, reports MSNBC news services.
Various fundamentals within the U.S. economy are anchoring a real recovery from occurring at a decent pace. Labor force participation in the United States is now down to 63.8%, close to a 30-year low. Meanwhile, the recession seems to have exacerbated a longer-term trend of stagnating real-wage growth, meaning those who remain in the labor force can’t get a raise, reports Koesterich. [New Options for S&P 500 ETFs]