Labor-market snapshot not pretty

Scott Tong Jun 2, 2006

KAI RYSSDAL: We start today with this basic assumption. One set of numbers can’t possibly tell you everything you need to know about the economy. Even the best of them — Gross Domestic Product, say, or today’s unemployment report — aren’t more than just snapshots. But just like the shots you take at home, you can see enough to know the picture isn’t so pretty. Companies did a whole lot less hiring in May than anybody expected. That’s got some saying today we’ve hit an economic inflection point. Here’s Marketplace’s Scott Tong with the definition.

SCOTT TONG: “Inflection point:” Noun. A moment of dramatic change. Either up or down.Today’s talk was down, as in employment showdown.

Companies last month added 75,000 jobs. Which was less than April, which was less than March, which was less than February.

NIGEL GAULT: We haven’t seen a number this low since the aftermath of the hurricanes.

Nigel Gault of research firm Global Insight also frets about hourly earnings — they crept up a mere penny in May. What’s going on here? Gault thinks it’s a gas, gas, gas story. Consumers smarting from the pump are skimping on discretionary stuff.

GAULT: Eating out: People don’t have to do it. And it’s something that’s fairly easy to cut back, if you’re being squeezed by high gasoline prices.

Indeed, today’s restaurant and retail jobs numbers were especially soft. Zoom out a bit, and Jared Bernstein of the liberal Economic Policy Institute thinks consumers face more than gas prices.

JARED BERNSTEIN: Higher interest rates are probably pushing back against growth now. Certainly the housing market has cooled. Some of these headwinds that are pushing back against growth are showing up in the job market.

Many economists see enough signs of slowdown that the Federal Reserve can take its foot off the brake and stop hiking interest rates.

Carl Weinberg of High Frequency Economics says then everyone can pause and see if this indeed is a tipping point in the business cycle. No one’s really sure.

CARL WEINBERG: It’s not a time of a clear uptick. It’s not a time of a clear downtick. There’s no trend to the numbers.

One economist says we’ve now entered a “Rorschach economy.” What do you see?

In Washington, I’m Scott Tong for Marketplace.

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