Business

After last month's "much stronger than expected" jobs report, Goldman was convinced that the Fed would hike in June and September, while disclosing its balance sheet tapering announcement in December. However, after today's disappointing jobs report, Jan Hatzius has flipped the last two, and says that he "now expects the third hike of 2017 to occur at the December meeting (we previously expected a hike in September and a balance sheet in announcement in December)."

If May was supposed to be the "tiebreaker" month, after a disastrous March and a solid (if now downward revised) April, then the US economy is not doing well: with only 138K jobs added in the past month, while over 200K actual jobs were lost (per the Household Survey), it was no surprise that the biggest missing link of the so-called recovery, wage growth, was simply not there again.

How is it that with the labor market supposedly near full employment, and the unemployment rate sliding to a post 2001 low of 4.3%, wages simply can not rise?

While on the surface, the payrolls report, the wage growth and the unemployment rate (which dropped for all the wrong reasons) were disappointing, a quick look inside the underlying data reveals even more troubling trends, such as that in addition to the number of employed workers dropping by 233K according to the household survey, the composition of these jobs raised even more red flags because in May the US lost 367,000 full time jobs offset by the gain of 133,000 part time jobs.

After 10 years of manipulating the bond market, the Federal
Reserve has overstayed its monetary policy welcome and created systemic
conditions that will have high costs for everyone.  There is a place for depressionary and
recessionary monetary policies, but that was almost a decade ago.  With GDP approaching 3% and inflation running
above 2%, do we really need policies and statements that keep unwitting
investors in a perpetual state of fear reflected in bond market yields that are
usually reserved for severe recessions and depressions?

While the payrolls report (and wage gains) was an unmitigated disaster for anyone seeking "evidence" of an economic rebound (i.e., the Federal Reserve), there was some good news in the Unemployment rate which declined from 4.4% to 4.3%, the lowest going back to 2001.

There is just one problem with the above "silver lining": the unemployment rate declined for all the wrong reasons, because contrary to expectations, the Household Survey reported that the number of employed Americans actually declined by 233K to 152.923 million, the lowest going back to February.