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Expand chart
Reproduced from a chart by Joseph Brusuelas; Chart: Axios Visuals

The U.S. economy is confounding: Three months from the longest expansion since such data began being tracked 170 years ago, the economy keeps pumping out strong job growth, and has now pushed down unemployment to a 50-year low.

Yes but: It is delivering only middling wage growth, lower for instance than the last expansion in the 2000s. That has been an enduring mystery, especially amid month after month of ultra-low jobless figures over the last year.

What's happening: In its latest report, the Labor Department said April joblessness was at a drum-tight 3.6%, the lowest since 1969. Normally, such a number would be considered well below "full employment," considering how many people change jobs as a matter of course. But in the current expansion, government and private economists say there is room yet for jobs to get even tighter.

  • The presumed continued slack in the economy may explain why wages grew just 3.2% in April.
  • That's double the approximately 1.6% inflation rate over the last year, providing workers a real gain. But economists point out that wages routinely grew by more than 4% on an annual basis during the expansion in the 2000s.
  • Joseph Brusuelas, chief economist at RSM (whose numbers are behind the chart above), said that such low monthly jobless figures should deliver greater wage gains. "Nominal wage growth is modest at best compared to previous business cycles late in the expansion."

This does not mean economists were unhappy with Friday's jobs report: On the contrary, they were mostly elated by the 263,000 jobs created in April, higher than expected. They also by and large treated the wage gain as something to crow about.

  • But this is because economists are largely trained to look at wage gains as a key contributor to inflation, which they regard as the No. 1 thing to guard against.
  • Very few economists treat the greater ability of workers to buy goods and services as a fundamental measure of economic health.

The political environment is starting to change that: Decades of largely flat wages and the loss of economic stature across U.S. cities and counties are thought to be a contributing factor in widespread alienation and institutional mistrust. That inflation does not appear to be taking off is also making economists more comfortable with strong wage gains.

Andrew Chamberlain, chief economist at Glassdoor, says that economic conditions are an argument for the Fed to keep interest rates flat and not tighten them. "The Fed should let the economy burn hot," he tells Axios. "This is one of those times historically where workers at the bottom can win gains."

  • Wage growth for the lowest-paying jobs are seeing the highest gains. Detailed figures are available only up to March. But in the first quarter, the lowest quartile saw a 4.4% wage increase year on year.
  • Among the steepest gains have been bartenders (a 9.6% increase on average over the last year) and retail cashiers and bank tellers (both 4.6%).

A red flag: In the first few months of the year, job listings are usually up at Glassdoor, but Chamberlain says that this year they are down. This contradicts the narrative of continued job growth, and could suggest a slower pace ahead. "It definitely shows that there has been some hesitation by some employers to hire," he said.

Go deeper

Updated 2 mins ago - Sports

Olympics dashboard

Team USA's Caeleb Dressel celebrates winning gold in the final of the men's 50m freestyle swimming event at the Tokyo 2020 Olympic Gameson Sunday. Photo: Odd Andersen/AFP via Getty Images

🚨: Simone Biles won't compete in Olympic floor finals, individual vault or uneven bars

🏊: U.S. wins gold in men's 4x100-meter medley relay, earning Caeleb Dressel fifth gold

πŸŠβ€β™€οΈ: Katie Ledecky wins gold in women's 800m freestyle

πŸ‡¬πŸ‡§: Britain wins gold in first-ever Olympic mixed 4x100m medley relay

πŸ’»: Japan tests teleporting games and "remote cheering"

πŸ³οΈβ€βš§οΈ: Axios at the Olympics: Games grapple with trans athletes β€” Trans athletes see the Tokyo Games as a watershed moment

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29 mins ago - Sports

Simone Biles pulls out of Olympic floor finals event

Photo: LOIC VENANCE/AFP via Getty Images

Simone Biles will not be competing in the Olympic floor exercise event to prioritize her mental well-being, USA Gymnastics announced Sunday morning local time.

What's happening: "Simone has withdrawn from the event final for floor and will make a decision on beam later this week," USA Gymnastics said in a statement. "Either way, we’re all behind you, Simone."

38 mins ago - Sports

U.S. wins gold in men's 4x100-meter medley relay

USA's Ryan Murphy (L) and USA's Caeleb Dressel celebrate winning the final of the men's 4x100m medley relay swimming event during the Tokyo 2020 Olympic Games at the Tokyo Aquatics Centre in Tokyo on Sunday. Photo: Odd Andersen/AFP via Getty Images

Team USA win the gold medal in the men's 4x100-meter medley relay, setting a new world record in the process on Sunday morning local time.

Driving the news: American Caeleb Dressel won his fifth Tokyo Games gold medal during the event.