Today’s report on job market conditions is among the weakest we’ve seen in a while and a potentially ominous signal that the slowing economy is finally catching up to the job market.

One month does not a trend make, but averaging over the past three months, payrolls have been expanding at a monthly rate of 118,000 per month, compared to 195,000 in the prior three months, a deceleration of 77,000 jobs per month. If this trend persists, unemployment will rise, as job seekers begin to outnumber job openings.

Importantly, average hourly earnings growth are slowing (see Figure after the break). Hourly earnings were up 0.2% last month, and 3.7% over last April. While still a decent nominal growth rate, that’s the slowest annual gain since last May. Adding the impact of declining average weekly hours, weekly earnings fell slightly in April and are up 3.4% over past year, about one point slower than March’s comparable figure of 4.3%.

As employment and wage growth slow, especially in a climate where energy and food prices are pushing up inflation, consumers will be hard pressed to continue boosting overall consumption, the one consistently strong component of GDP growth.

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Our stimulating--to me anyway (an easily stimulated person, apparently)--discussion around inflation morphed into an important discussion about productivity growth.

But for this pesky day job, I could go on for days chattering about this. But let me just make a few points now.

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A few weeks ago, in the course of a few hours, I came face-to-face with the inflation conundrum which is, I believe, under-appreciated by the economic punditry.

It all started when the speakers from my faithful, yet ancient, stereo system died of old age. I guess I blasted “Purple Haze” and other boomer anthems one too many times (the big, clunky tuner is as healthy as ever and is living in my attic—I should give it to the Smithsonian). So I headed out to the big box electronics store to get a new high-quality system.

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