Mark Zandi had it exactly right on Squawk Box this morning (nine and a half minutes into this clip). As we wrote back in January and February, whether we're in a "recession" or not is sort of a silly question--because people are feeling recessionary (even stagflationary) conditions all around them.

Which might help us understand how the May NFP report could show a relatively modest decline of 49,000 jobs and a 0.5% rise in the unemployment rate to 5.5%. Seasonal factors may account for some of the sharp rise in the reported unemployment rate. But we suspect there's another factor in play here: American households, increasingly squeezed by stagnant wages, a weak job market, and rising prices for food and energy are sending people back into the job-seeking workforce out of economic necessity. Indeed, the BLS reported a jump of 577,000 workers in the civilian labor force between April and May.

It would be comforting to think that this is just a bunch of teenagers looking for work at the local waterpark this Summer. Or that people are re-entering the labor force because they're so bullish on their job (and earning) prospects that they can't help but go back to work. Alas, we fear the reality is a little less sanguine.

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Kevin S. Price

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