MEGAN BASHAM, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
MARY REICHARD, HOST: American employers added 224,000 new jobs in June, and that’s better than anticipated—and, crucially, it’s better than the 170,000 average jobs-added so far this year.
Average hourly wages are up, as well, 3.1 percent better than a year ago.
The unemployment rate remains within range of a 50-year low, but it ticked up one-tenth of a percent to 3.7 in June. That’s a good thing, though, because it’s due entirely to more Americans entering the labor market. Those who are not actively seeking work aren’t included in the count.
The Commerce Department jobs report also marks a recovery from a terrible month of May, in which employers added just 72,000 new jobs.
Historically, though, so far 2019 is the worst of the Trump years and a substantial decrease from last year, which saw an average of 220,000 jobs added each month.
BASHAM: On Wall Street, stocks reached record highs before the markets closed for the Fourth of July holiday. The Standard & Poor’s 500 index set new record highs on Monday, Tuesday, and Wednesday. The Dow Jones Industrial hit an all-time record high Wednesday.
What buoyed investors was the trade truce President Trump announced between the United States and China.
But following that market holiday, stocks retreated slightly on Friday and it was the good news on jobs that traders took as bad news for them. The reason is, they considered the unexpected jobs report a sign that the Federal Reserve might NOT cut interest rates after all. The reasoning goes like this: the chairman of the Fed has been telegraphing a cut in interest rates as insurance against a downturn in the economy. If the Fed sees positive economic indicators, that might cause the central bank to rethink the rate cut. That would make stocks a better bargain than interest-bearing investments.
President Trump has been banging the drums for a rate cut. In his view, higher borrowing costs are holding back economic growth.
REICHARD: Fed chairman Jay Powell goes to Capitol Hill Wednesday and Thursday. He’ll face questions about his semi-annual monetary report. Last week, Powell reiterated his pledge to “act as appropriate” to sustain the current economic expansion, which now in its 11th year is the longest-ever in U.S. history.
Powell’s report said that since May, quoting here, “the tenor of incoming information on economic activity, on balance, has become somewhat more downbeat and uncertainties about the economic outlook have increased.”
The Fed’s two biggest concerns are sluggish global economic growth and trade tensions, primarily between the United States and China.
And that’s this week’s Monday Moneybeat.