A Jobs Report Only the Markets Could Love
Policy + Politics

A Jobs Report Only the Markets Could Love

AP Photo/Nati Harnik

Only Goldilocks would have take joy in the May jobs report.

The Bureau of Labor Statistics reported Friday that payrolls increased by 175,000, a reflection of an economy that’s neither too hot, nor too cold. The unemployment rate ticked up slightly to 7.6 percent.

These top line stats suggest that growth is not solid enough for the Federal Reserve to ease off its monetary stimulus, not weak enough to indicate that the central bank’s third round of quantitative easing should continue.

Instead, the jobs report only confirmed the existing confusion about the economy. It beat Wall Street expectations of payrolls jumping by 165,000, but the middling figures only confirmed the status quo assumptions about the slow recovery.

Housing prices continue to recover by leaps and bounds in Phoenix and Las Vegas, the regions hit hardest by the 2008 financial crisis, according to the Case-Shiller index. The Dow Jones Industrial Average has climbed nearly 15 percent since the start of the year. But there continues to be disturbing trends—such as the 4.3 percent annualized decline in labor costs during the first three months of the year, according to government figures released Wednesday.

“This jobs report clarified nothing/everything/added confusion to the debate. You may pick your preferred poison” David Kotok, chairman of Cumberland Advisors, wrote to clients. “Essentially, we continue the slow growth, modest recovery trend.  It is not enough to change Fed policy or accelerate tapering.   It is not enough to delay a Fed policy change. On balance, we would call today’s report right in the middle of the pack.”