Friday’s job report from the US labor Department brought a whopping 272,000 non farm jobs to the American economy, this time far exceeding expectations of 180,00 that most economists had predicted, and with an uptick in the banner unemployment rate of 4.0 from the previous month of April at 3.9 percent, none of which is going to assuage the fears of the Federal Reserve meeting next week to determine the course of the economy, and what many government officials, media pundits and columnists want to see: an interest rate cut.
Making that prediction even more complicated is the increase in wages, to 4.1, and with higher prices and inflation still hovering above their historic mandate of 2 percent, this is a hope against hope for those observers, as more jobs at higher wages will put the brakes on a cut, from the current range from 5.25 to 5 percent.
It should be noted that inflation currently hovering at 3.4 percent has taken a tumble from its 9.0 average in June of 2022.
Hovering in the background is the November presidential election in a rematch between incumbent President Joe Biden, and former president Donald Trump, the presumptive Republican nominee. General trust in the handling of the US economy favors Trump, according to an ABC News/Ipsos poll.
That poll shows Trump with 46 percent, and Biden at 32 percent, despite the fact that any US president has the finger of the scale of the American economy.
What can easily be determined is that the office holder can influence economic decisions, to a point, and they can, if their party dominates Congress, they, together, can pass legislation to increase certain legislation, such as tax cuts. The last time this was seen, most recently was Trump passing a permanent cut for the wealthiest of corporations, and a temporary cut for Jane and Joe Average.
The unemployment rate of 4.1 is the highest since January of 2022, reported The New York Times, but it is something that many of the public may not realize, as they do their weekly grocery shopping, and that level of anger might fuel what is predicted to be a dominant issue in the race to the White House.
Confidence in the economy by Americans has fallen to 14 percent, and despite the fall from the high point of inflation, those prices at the supermarket, and at the gas pump are making consumers wince.
To that effect, the Associated Press reported at the end of May that Biden is “releasing 1 million barrels of gasoline from a Northeast reserve established after Superstorm Sand in a bid to lower prices at the pump this summer.”
Located in New Jersey and Maine these sales, “will be allocated in increments of 100,000 barrels at a time.”
The sales will create “a competitive bidding process that ensures gasoline can flow into local retailers ahead of the Fourth of July holiday and sold at competitive prices, the Energy Department said.”
Most importantly, AP noted that,“Tapping gasoline reserves is one of the few actions that presidents can take by themselves to try to control inflation, something that if voters perceive as high can be an election year liability for the party in control of the White House.”
Returning to the jobs outlook, the report shows there are dominant jobs topping the list, mostly in the service sector, particularly health care, and a by product of that surge has been an increase in the percentage of women working in these roles, and of those 68,000 jobs, many with women in their prime working years, from 25 to 54 years of age, hitting 78.1, according to BLS data.
While CNN noted that these levels were once high pre-pandemic, their return does signal an evening of the playing field, and, of course, the option of working at home, for white collar women, has also increased the numbers.
Government jobs also did a rebound, especially local and state government, much like in April at 43,000, and hospitality remained steady at 42,000 jobs, and with many Americans enjoying dining out, and with their increased wages those numbers should continue to rise.
The Times also added, “The headline jobs number is a source for celebration for President Biden: “On my watch, 15.6 million more Americans have the dignity and respect that comes with a job,” he said in a statement. But Mr. Biden is trailing in the polls, possibly indicating that Americans care more about high prices than they do about plentiful jobs.”
Taking a look at the household survey, we get a different picture: “That data showed that the number of people who were employed last month actually fell by 408,000, while the unemployment rate rose to 4 percent for the first time in more than two years,” and while there are two different methodologies, employers survey only focusing on employees, the household survey also includes independent contractors, and the self employed, noted the Times, and citing a discrepancy, they added,“Adjusting the household survey to align with the concepts used in the employer survey makes the job losses in May look larger, not smaller.”
If this does occur it might be welcome news for the Feds, who are not expected to cut rates, when they meet dashing hopes for a July cut, but some are betting on a September cut, but as we have previously noted, chair Jerome Powell is committed to the data before he and the Federal Open Market Committee make any cuts.
The recent release of the Consumer Price Index showed that, absent food and energy which are volatile, there was an overall rise in inflation of 0.2 in May, but shelter costs increased to 0.4 percent, "the largest factor" in the monthly index according to the Bureau of Labor and Statistics. They also reported that there was a 0.1 percent increase in food prices.
Overall, for all urban consumers BLS reported the Index was "unchanged, seasonally adjusted, and rose 3.3 percent over the last 12 month, not seasonally adjusted." This is slightly under the expected percentage of 3.5 predicted by many economists.
Of concern will be the increase in hourly wages, and that increase to 4.1 percent coupled with the increase in jobs, without the discrepancy between the two surveys is something that the Fed will certainly keep tabs in in any future rate cuts.
For May, Labor Force Participation for those 20 to 24 years of age fell from 72.4 in April to 70.8 percent in May, less than expected, and June college graduates may have a harder time finding jobs.
Updated June 17, 2024 at 1: 42 p.m. CDT
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