The bond market was understandably pleased with the lackluster employment report for the month of June. Weak job growth and declining real wages mean a weak economy and little prospect for upward pressure on prices.

The overall unemployment rate fell to 5.0 percent because of a continuing decline in the portion of the U.S. adult population seeking employment. Pessimism over the prospects of finding work is undoubtedly part of the explanation of why the share of adults in the work force dropped in June by .07 percent, equal to about 158,000 workers. If the share of the adult population holding jobs or seeking work had remained constant since 2000 there would be more than 10 million Americans unemployed and the rate of unemployment would be 6.7 percent.

The 146,000 jobs which the Labor Department reports were created in June equal a 0.11 percent increase over the prior month. The average monthly increase in U.S. employment over the past 50 years has been 0.19 percent, or a pace about 70 percent greater than the June increase.

Nominal wages for production and non-supervisory workers increased from $16.03 per hour to $16.06. Given the average pace of inflation over the past year that is about a penny less than the amount required to stay even. Average hours worked remained unchanged, leaving families with less real income in June than they had in May.

This represents a continued deterioration in consumer purchasing power. The lower real interest rates signaled by the rally in the bond market mean that we will continue to generate economic growth based on borrowing power rather than earning power. At some point the piper will have to be paid.

Scott Lilly is a senior fellow at the Center for American Progress.

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