Today is a big jobs report, and once again the spotlight will be on wages and growth. Further, what metrics will the Fed be considering and will they be enough to start triggering inflation? After the very weak jobs number in March (remember Good Friday’s release, when the futures dropped 1% as the markets were closed?) I suspect we could be in for more of the same.
However, we should be reminded that better weather was the case in April and revisions might be to the upside given the very weak number in March. As for wages, we have seen such little growth due to the slack in the labor pool being so big, those who want jobs are still having difficulty. While this had been a big driver of continued monetary policy it’s true this was not a cure to heal the economy.
Former Fed Chairman Ben Bernanke recently penned an article defending the Fed’s policy of low rates and the QE program which helped stimulate growth in jobs, but has not been matched with an equally effective fiscal policy. In turn, the economy is just trudging along in a slow-growth mode.
The April jobs report may not be the one to trigger a pivot in monetary policy, so any panic is likely a misunderstanding of the data. I suspect more is needed to make a full decision, and the next meeting in June will also include the May jobs report, where we may have some better clues to support a change in Fed policy.
