{"id":16711,"date":"2019-06-08T15:28:52","date_gmt":"2019-06-08T15:28:52","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=16711"},"modified":"2019-06-08T23:45:05","modified_gmt":"2019-06-08T23:45:05","slug":"may-jobs-report-suggests-a-slowing-economy-and-possibly-an-imminent-interest-rate-cut","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/may-jobs-report-suggests-a-slowing-economy-and-possibly-an-imminent-interest-rate-cut\/","title":{"rendered":"May jobs report suggests a slowing economy \u2013 and possibly an imminent interest rate cut"},"content":{"rendered":"<p><a href=\"https:\/\/theconversation.com\/profiles\/richard-grossman-752707\">Richard Grossman<\/a>, <em><a href=\"http:\/\/theconversation.com\/institutions\/wesleyan-university-1361\">Wesleyan University<\/a><\/em><\/p>\n<p>The latest jobs data suggests an interest rate cut may be imminent.<\/p>\n<p>The <a href=\"https:\/\/www.bls.gov\/news.release\/pdf\/empsit.pdf\">Labor Department reported<\/a> on June 7 that U.S. nonfarm payroll employment increased by 75,000 in May, while the unemployment rate remained unchanged at 3.6%. This level of <a href=\"https:\/\/fred.stlouisfed.org\/series\/PAYEMS\">job creation<\/a> was well below <a href=\"https:\/\/www.barrons.com\/articles\/the-may-jobs-report-is-coming-heres-what-to-watch-unemployment-51559837930?\">economists\u2019 forecasts of about 185,000<\/a> new jobs, as well as below the average monthly increase of 164,000 in 2019 and 223,000 in 2018.<\/p>\n<p><iframe loading=\"lazy\" id=\"b7lOt\" class=\"tc-infographic-datawrapper\" style=\"border: none;\" src=\"https:\/\/datawrapper.dwcdn.net\/b7lOt\/1\/\" width=\"100%\" height=\"400px\" frameborder=\"0\"><\/iframe><\/p>\n<p>Although it\u2019s difficult \u2013 even for an <a href=\"https:\/\/scholar.google.com\/citations?user=YfnH5voAAAAJ&amp;hl=en&amp;oi=ao\">economist like me<\/a> <a href=\"https:\/\/t.co\/4z0tXohxQv?amp=1\">who studies economic policy<\/a> \u2013 to interpret the data reported in any one jobs report as the beginning of a trend, the latest numbers do suggest the Federal Reserve may have to lower its benchmark interest rate to shore up the economy.<\/p>\n<p>That may happen as soon as this month, when the Fed\u2019s interest rate-setting panel, the <a href=\"https:\/\/www.federalreserve.gov\/monetarypolicy\/fomc.htm\">Federal Open Market Committee<\/a>, convenes its next meeting June 18-19. A cut would be a sharp reversal from Fed <a href=\"https:\/\/www.cnbc.com\/2018\/12\/19\/heres-what-changed-in-the-december-fed-statement.html\">policy<\/a> as recently as December, when it last raised the rate.<\/p>\n<p>Even before the May jobs data, the Fed was signaling it was ready to act. Its chair, Jerome H. Powell, <a href=\"https:\/\/www.federalreserve.gov\/newsevents\/speech\/powell20190604a.htm\">said as much<\/a> on June 4. Alluding to the Trump administration\u2019s <a href=\"https:\/\/www.washingtonpost.com\/world\/china-fires-back-at-us-tariffs-vows-to-defend-its-core-interests\/2018\/07\/06\/f42fc812-8091-11e8-a63f-7b5d2aba7ac5_story.html?utm_term=.17b5cdbbe538\">ongoing trade dispute with China<\/a> and the imminent imposition of <a href=\"https:\/\/finance.yahoo.com\/news\/trump-hitting-mexico-5-tariff-response-migrants-234930304--finance.html\">migration-related tariffs on Mexico<\/a>, Powell said that the Fed \u201cwill act as appropriate to sustain the expansion.\u201d<\/p>\n<p>His statement has been <a href=\"https:\/\/www.nytimes.com\/2019\/06\/04\/business\/economy\/powell-fed-trade-wars.html\">widely interpreted<\/a> to mean that the Fed will cut interest rates to counteract the negative economic effects of tariffs. By lowering interest rates, this kind of monetary policy encourages both business and consumer spending, which rely in large measure on borrowed funds.<\/p>\n<p>It\u2019s important not to make too much of one jobs report. Idiosyncratic factors can outweigh a trend in any given month, and the Fed is unlikely to do much unless it\u2019s certain there\u2019s a meaningful shift. And revised data \u2013 which will come out next month \u2013 may end up reversing this \u201ctrend.\u201d<\/p>\n<p>Nonetheless, the jobs report suggests a slowing of economic growth in the U.S. and significantly <a href=\"https:\/\/www.usatoday.com\/story\/money\/2019\/06\/07\/jobs-report-economy-added-just-75-000-jobs-may\/1374420001\/\">increases the odds<\/a> that the Fed will lower interest rates when it meets in Washington, D.C., later this month.<\/p>\n<p>[ <em>Like what you\u2019ve read? Want more?<\/em> <a href=\"https:\/\/theconversation.com\/us\/newsletters?utm_source=TCUS&amp;utm_medium=inline-link&amp;utm_campaign=newsletter-text&amp;utm_content=likethis\">Sign up for The Conversation\u2019s daily newsletter<\/a>. ]<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img loading=\"lazy\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;\" src=\"https:\/\/counter.theconversation.com\/content\/118439\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" \/><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: http:\/\/theconversation.com\/republishing-guidelines --><\/p>\n<p><a href=\"https:\/\/theconversation.com\/profiles\/richard-grossman-752707\">Richard Grossman<\/a>, Professor of Economics, <em><a href=\"http:\/\/theconversation.com\/institutions\/wesleyan-university-1361\">Wesleyan University<\/a><\/em><\/p>\n<p>This article is republished from <a href=\"http:\/\/theconversation.com\">The Conversation<\/a> under a Creative Commons license. Read the <a href=\"https:\/\/theconversation.com\/may-jobs-report-suggests-a-slowing-economy-and-possibly-an-imminent-interest-rate-cut-118439\">original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Richard Grossman, Wesleyan University The latest jobs data suggests an interest rate cut may be imminent. The Labor Department reported on June 7 that U.S. nonfarm payroll employment increased by 75,000 in May, while the unemployment rate remained unchanged at 3.6%. This level of job creation was well below economists\u2019 forecasts of about 185,000 new [&hellip;]<\/p>\n","protected":false},"author":44,"featured_media":16708,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[277],"tags":[1870,2458,172,224,1581,6448,138,350,6449,679,6447,2197,6451,6450,677,104,1580],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/16711"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=16711"}],"version-history":[{"count":2,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/16711\/revisions"}],"predecessor-version":[{"id":16716,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/16711\/revisions\/16716"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/16708"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=16711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=16711"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=16711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}