What’s happening with the economy?
Friday’s employment report contained some good news. Not only did the economy create almost 200 thousand jobs last month, but April and May were both revised higher as well, for a total pick-up of some 300 thousand jobs. And the leading elements of the job report were higher as well: temporary jobs went up, hours worked increased, and average hourly earnings were higher. Both the household survey and the establishment report indicate that the job market is getting healthier.
This is important, because the jobs report is the broadest assessment we have of what the economy is doing. Some folks dismiss the report as “old news,” but this data has been collected, reviewed, and analyzed for over 60 years. The report moves markets around the world precisely because it is so reliable.
So most economists expect the Fed to begin to reduce their purchases of government bonds sometime this fall, and eliminate it by the middle of next year. They’re still a long ways from raising rates. But this report makes it look like our national stuck-in-second-gear-economy may finally be shifting into third.
Douglas R. Tengdin, CFA
Chief Investment Officer