Larry Kudlow
You can’t win with the economic pessimists.

The cult of the bear still reigns supreme in most corners of Wall Street and the mainstream media, as those who want to tear down the economy continue to manufacture justifications for their declinist American views. If jobs reports come in above expectations, the naysayers predict inflation. When they come in below, the pessimists predict recession.

So it was with Friday’s 75,000 increase in non-farm payrolls for May. That number was greeted derisively, despite the fact that over the past 33 consecutive months, 5.3 million new jobs have been created. Through the year ending in May, 1.9 million new jobs have been created with the unemployment rate moving down to 4.6 percent -- the lowest rate in nearly five years and below the average of the last forty-five years.

But wait -- there’s even more good news being clouded out by the pessimist frowns: The Labor Department’s household survey, which focuses on self-employed owner-operators of new entrepreneurial businesses, showed a booming May jobs increase of 288,000. You won’t likely hear a peep about this in the mainstream media, which shuns this survey month after month.

Year to date, the entrepreneurial household sector has produced 1.2 million new jobs (326,000 of which are self-employed), compared to only 730,000 from the corporate establishment payroll survey. Historically, when a big spread opens up between these two series, it is the payroll survey that gets revised upward, or that catches up in future months. This was particularly the case in 2003 and 2004, when the Democrats who proclaimed a “jobless recovery” had to eat crow.

Studies done by the Labor Department acknowledge the importance of the household data, from which the unemployment rate is derived. And economists at the Bureau of Labor Statistics have offered a “split the difference” rule of thumb to reconcile the two surveys. Using this approach, you get 964,000 new jobs year-to-date, or 193,000 per month. Pretty darn impressive.

The economy is so strong that more and more people are still entering the labor force in search of new work. The civilian labor force has expanded by 838,000 this year. Meanwhile, the number of people who are not in the labor force but want to work is up 400,000. Discouraged workers are down 128,000.

Right now, total employment in the U.S. stands at a record high of 144 million. This is a big number, just as 4.6 percent unemployment is a low number. In fact, the number of unemployed has dropped by 2.2 million since the mid-2003 peak, and by 400,000 this year alone.


Larry Kudlow

Lawrence Kudlow is host of CNBC’s “The Kudlow Report,” which airs nightly from 7 p.m. to 8 p.m.