One must strain to read last Friday’s labor report as anything but an unambiguous disappointment. We cannot extrapolate a trend from two consecutive months of weak data, but the market is rightly concerned that the broader economic expansion may be losing momentum after a strong start to the year. The new data need not trigger a flight from rational levels of risk-taking and investment; instead, it should serve as a clarion call to anyone who has stymied efforts to refocus the national policy agenda squarely in support of private sector job creation.

Is there a silver lining in the unemployment rate, which slipped to 8.1 percent in April? The headline improvement reflects a decline in the labor participation rate rather than acceleration in hiring. The household survey – from which the unemployment rate is calculated – shows that employment actually fell by 169,000 jobs in April. The unemployment rate dropped because the number of people not participating in the labor force increased by more than half a million during the month. The math does not suffer tall stories to the contrary.

Goods-producing industries, including construction, were essentially flat in April. Service industry gains were concentrated in retail and restaurant employment, temporary help services, and health care. While it is crucial that we see Americans returning to work, these are not the occupations that will enhance the productive capacity and competitiveness of the US economy over the long term. The employment data is volatile and next month’s results could easily bear out a stronger underlying trend. To assume that will happen – or to expect monetary policy will offset failures elsewhere – is to concede a new standard of cognitive dissonance along the Beltway.