What’s going on here?
The US added more jobs than expected for the fourteenth-straight month – and at this stage, our graphic designer’s running out of ideas.
What does this mean?
Despite rising interest rates and recession chatter, the US job market has been flexing lately, powering spending and stoking inflation. A hefty 339,000 jobs were added last month – leaving April’s 294,000 and economists’ timid 190,000 forecast in the dust. But it wasn’t all job-market jazz hands: there were pockets of weakness starting to show too. After all, the unemployment rate leaped up to 3.7% – a jump not seen since 2020 – and 440,000 more people found themselves out of work in May (the most since the pandemic). Meanwhile, annual wage growth was catching its breath too, slowing to a robust but less-than-expected 4.3%.
Why should I care?
For markets: Potential to pause.
With companies still laying off workers, consumer confidence hitting a six-month low, and economists betting on a recession, the economy might be set for a bit of a cool-down. And that might just be the green light the Federal Reserve (the Fed) needs to pause interest rate hikes this month. That breather would give the last ten rate hikes more time to percolate through the economy, while keeping the door ajar for a potential restart in July, if needed. So while traders may be upping the odds of a hike this month, a pause still seems more likely.
Zooming out: A brush with debt.
Regardless of the Fed’s decision, there’s one fewer catastrophe threatening to bulldoze the economy now. In a rare show of unity, Democrats and Republicans have brokered a deal to suspend the US debt ceiling, successfully dodging what could have been a catastrophic default on US government debt and a full-blown financial crisis.
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