We’re talking round numbers here…
A U.S. jobs report in today shows non-farm payroll jobs added to the American economy in May at 75,000, instead of the 175,000 that economists expected.
Breaking news from the Department of Labor also shows unemployment holding steady at around 3.5 percent, though economists admit that doesn’t tell us a lot about the realities job seekers face…
As for sectors, government jobs headed declines, which jibes the headlines throughout the year of U.S. department posts going unstaffed or filled by “acting” heads, and the avowed goal of some in the Washington machinery to “cut government.” Government workers have also been hard hit by the government shutdown last year and other threats to their job security.
As for market fallout, the low job growth numbers have failed to register in a five-day stock rally that persists in today’s end of week session. It seems investors are still looking for the Fed rate cut, pouring money into stocks on the hope that the economy gets a nice massage from the central bank.
Long-term, though, traders can’t expect that optimism to last — not with tariff consequences riling markets, and more job fears on the horizon.
It’s important to view the current jobs numbers in context: While a miss of 100,000 isn’t insignificant, American scryers like 2020 presidential hopeful Andrew Yang suggest we’ll see millions of jobs disappear within a few years’ time as automation hits, resulting in the need for a universal basic income and other drastic measures to help American households in a scaled-down gig economy.
Any actual evaluation of poor jobs growth on markets will probably have to come after the Fed puts to bed the idea of a rate cut (or, alternately, cuts rates with the market pricing that in,) but the combination of lower than expected jobs growth and tariff uncertainties is a powerful one-two punch that would seem to provide fodder for a profound bear market.
