The U.S. economy added only a net 38,000 jobs in May, according to the jobs report from the Bureau of Labor Statistics this morning. Economists surveyed by Bloomberg had projected job gains of 90,000 to 215,000 with the median forecast at 160,000.
A report from the Commerce Department this morning showed consumer spending picking up by 1% in April. Wages and salaries gained 0.5%. All that argues that the U.S. economy is set to rebound after weak growth in GDP in the fourth and first quarters. Economists had expected consumer spending to climb 0.7% in April.
Yesterday, May 25, U.S. stocks looked set to bust right on through the top of the recent trading range at 2100. Today, May 26, not so much. The index stalled at 2090–and closed at 2089.25.
On Wednesday the Federal Reserve will release the minutes from its April meeting–against a background set by today’s release of numbers showing stronger than expected wage and inflation growth.
Under some circumstances you’d expect a weak jobs number to send markets higher because it would signal that the Federal Reserve will put off the next interest rate increase. But not today. The Dow Jones Industrial Average was off slightly, by 0.07%, as of 11:30 a.m. New York time. The Standard & Poor’s 500 slipped 0.18%. That’s because markets have already priced in a one or none scenario for 2016.
After yesterday’s weaker than expected report on GDP growth, the Fed Funds futures market is giving odds of just 12% on a June interest rate increase. The odds of a June rate increase had been 21% after the Fed’s Wednesday meeting
U.S. financial markets have apparently decided that the disappointing first quarter GDP data released this morning are just another example of first quarter weakness. It’s the third straight first quarter GDP read that has shown a U.S. economy headed toward stagnation–and in each case the economy recovered to show better growth in the rest of the year.
This morning the Bureau of Economic Analysis reported a revised increase of 1.4% for fourth quarter GDP. The previous estimate had been 1%. Of course, the Fed knew this was coming
In the first weeks of April investors and traders will get new data on jobs (April 1) and on the manufacturing and service sectors. After that we’ll get the start of earnings season and reports on retail sales
Today’s revised GDP report shows the U.S. economy grew at a 1% annualized rate in the fourth quarter instead of the earlier estimates of 0.7% growth. Growth in the quarter is still down from the 2% growth in the third quarter
Sales of previously owned homes rose in January to the second-highest pace since early 2007. Prices climbed from January 2015 as well
