Though today’s #payroll report printed weaker than expected, we nevertheless think that the U.S. #economy is witnessing a transformation that is dramatic and persistent, and it is one that doesn’t fit neatly into the models drawn from previous experience.
In fact, the shift in focus from #manufacturing employment to service-sector #employment continues apace longer term, and at 3.4%, we’re beginning to see some decent earnings growth.
Today’s data won’t alter the #Fed’s “patient and flexible” mantra, and the data still allows the Fed a good deal of time before needing to decide on whether it can get another #rate hike in this year, or not, but likely not at this stage.
Finally, more #jobs would be a win/win for an economy that’s witnessing growing #debt and entitlement-spending, but higher wages make forward hiring somewhat harder.
Yet, new research makes a compelling case for #Fed policy makers to consider allowing the labor market to run hot for a bit, since some of the least economically advantaged groups will tend to flourish most dramatically when labor #market strength persists for an extended period.
That also bolsters the case for an extended #FedPause in policy rates, as we look through #weather-impacted data.
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