An investment expert warns that the US economy is on “shaky foundations”

Mitch Rosshel, co-founder of Macro Trends Advisors LLC, warned Sunday that the US economy is on a “fragile foundation,” despite what many economists and analysts saw as a positive April employment report.

It was revealed on Friday that the US economy saw strong job growth in April, indicating that the labor market remains strong despite headwinds from higher interest rates, rising inflation, a worsening labor shortage and fears of a slowdown.

Employers added 428,000 jobs in April, the Labor Department said in its monthly payroll report released on Friday, topping the 391,000 jobs that economists at Refinitiv had expected. It was the 12th consecutive month that job gains topped 400,000 jobs. Meanwhile, the unemployment rate held steady at 3.6%, the lowest level since February 2020.

“What often happens is you look at the headline numbers,” Rosshill told Fox News Live on Sunday.

The US economy sees healthy job growth in April with the number of employees increasing by 428,000

He went on to acknowledge that more than 400,000 jobs have been added, “and the unemployment rate is declining,” but pointed out that “one of the reasons for the drop in the unemployment rate is the low rate of our labor participation.”

He noted, “It’s actually decreased for the first time in three months, which means a decrease in the number of people joining the workforce.”

The labor force participation rate, a key measure of the active workforce, fell 0.2 percentage points in April to 62.2%, matching the lowest level recorded this year as the workforce shrank by 363,000 workers.

Roschelle also pointed to data from the Job Opportunity and Employment Turnover Survey (JOLTS) released Tuesday, which revealed that job opportunities in the United States reached a record high of 11.5 million in March.

“So, for some reason, we have this twisted labor market where there are open jobs and we can’t find people for them, and when you don’t have a really full job, which we don’t, you don’t really have that power to an economy, which means we might not be able to withstand this inflation storm as we had hoped.”

Roschelle also pointed to data from the Labor Department, which on Friday revealed average hourly wages rose 5.5% year-on-year in March, down slightly from 5.6% the previous month. The data comes amid soaring inflation, which hit a 40-year high in March.

Last month, the Labor Department said the Consumer Price Index (CPI) — which measures a range of goods including gasoline, health care, groceries and rents — rose 8.5% in March from a year ago, the fastest pace since December 1981, when the rate was Inflation is 8.9%. Prices jumped 1.2% in a one-month period in February, the largest monthly jump since 2005.

Inflation data for April will be released on Wednesday.

“I think the Fed has been denying we’ve had an inflation problem, calling it fleeting for too long,” Rosschel argued on Sunday.

“In terms of money printing, which has printed trillions of dollars of money to get us out of the COVID crisis, they are very late in acknowledging the need to stop printing money.”

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Then he referred to what contributed to inflation on the part of fiscal policy.

“I think we’ve been continuing to stimulate the demand side of the economy,” Roschel said. “The latest $2 trillion COVID rescue bill wasn’t necessary. It just kept pumping money into the economy and very simply too much money chasing too little stuff leads to inflation.”

He continued, “We still have not fixed the supply side of the economy and this is the only way to fix it,” noting that “this is not the Fed’s job,” so it will require Congress to move “to try to find ways to fix and stimulate the supply side of the economy and stop stimulating demand.”

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