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The economy just got its worst job report in years

The US economy created 38,000 jobs in May, the slowest pace of job growth in five years, according to disappointing statistics released today by the Labor Department. It's an ominous sign for the US economy — and for Hillary Clinton's chances of beating Donald Trump in the November election.

The US economy needs to add about 150,000 jobs a month to keep up with population growth. In the past couple of years, the economy has been doing a bit better than that, adding 200,000 jobs in a typical month.

But the May report suggests that the economy may be starting to slow down in a dramatic way. Not only did job growth fall well short of economists' expectations in May, but the Labor Department also revised its estimates for March and April job growth downward by a total of 59,000, suggesting that there are actually fewer people employed than we thought a month ago.

The Verizon strike is a cause, but there's more bad news

What accounts for the drop? One factor is the strike among Verizon workers, which cost the economy about 34,000 jobs. Those jobs should reappear in future reports. But that's hardly enough to account for a totally underperformance of more than 200,000 jobs.

There's other bad news in the report too. Over the past six months, the economy had started to reverse a years-long decline in the labor force participation rate — a sign that a healthy economy was starting to draw workers who had left the economy back in. But the latest report shows the economy has given most of those gains back, with the labor force participation rate falling from 63 percent in March to 62.6 percent in May.

Even the good news is bad news

And that's the right context in which to view the one piece of seemingly good news in the report: the unemployment rate falling from 5 percent to 4.7 percent. Normally, a fall in the unemployment rate would be good news, but in this case it appears that a lot of people simply stopped looking for work and left the labor force — hardly a sign of progress.

Slow economic growth is never good news, but the stakes are especially high now, six months ahead of a high-stakes presidential election. Political science suggests that the performance of the economy in the months before a presidential election has a big impact on election outcomes. In this case, poor economic performance is bad news for Democrats and Hillary Clinton in general. If this month's report signals the start of a recession, that would boost Donald Trump's chances of becoming the next president.

At the same time, it's important to note that jobs data is inherently noisy — sometimes the economy delivers a month of bad job gains and then resumes its upward trajectory. So while the latest data is a reason for workers to worry, we shouldn't panic yet.

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