NEW YORK (TheStreet) -- This week U.S. growth and labor figures will be the focal point of financial markets. While many analysts tout the impressive headline readings, the data below the surface may be telling the real story.
U.S. nonfarm payrolls have exceeded the 200,000 monthly jobs marker since February and is one of the main contributors to the rapid decline of the unemployment rate. However, U.S. growth declined by 2.9% in the first quarter due to one-off factors such as severe weather.
Analysts hope growth this quarter will be aided by better-than-expected U.S. corporate earnings and the strong recovery in labor market conditions. However, the part-time employment rate for economic reasons remains historically high.
Part-time employment for economic reasons essentially means the person would really prefer full-time work but took a part-time job to pay the bills. The current percentage of part-time workers within the civilian labor force stands at 4.78%, according to Bureau of Labor Statistics data.
This percentage has receded from close to 6% in 2010 following the financial crisis, but remains at historically elevated levels compared to the unemployment rate, which could fall below 6% this month.
The situation mirrors the recession experienced in the late 1970s and early 1980s in the United States. During that period the unemployment rate spiked over 10% while the part-time employment rate rose to levels seen in 2010.
In the decade after, however, unemployment fell to 5%, while part-time employment declined to 3.75% during Ronald Reagan's presidency.
The comparison of the two eras shows that the present day labor market may still have some slack in it, and may not be as healthy as a sub-6% unemployment rate assumes.
Slack in the labor market could potentially weigh on long-term growth and wage increases, which will ultimately keep inflation subdued.
The Federal Reserve remains committed to ending its stimulus program by years end, but with a continued high percentage of part-time jobs, central bankers may have a tough time significantly increasing interest rates.
In this case, interest rate-sensitive assets such as iShares Barclays 20+ Year Treas Bond (TLT), iShares S&P National AMT-Free Muni Bd (MUB), and PIMCO Investment Grade Corp Bd Index ETF (CORP) have bullish outlooks, while iShares Dow Jones US Regional Banks (IAT), which profits from higher rates, have bearish outlooks.
Only when both headline and underlying strength returns to the labor market will the economy truly be able to function properly on every level.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.