A sign that reads "Help Wanted Apply Within" hangs in the window of a beverage store. Tim Boyle (c) Getty Images

June employment up — but short of expectations

Stacey Vanek Smith Jul 7, 2006
A sign that reads "Help Wanted Apply Within" hangs in the window of a beverage store. Tim Boyle (c) Getty Images


MARK AUSTIN THOMAS: Good economic news this morning. Employers added 121,000 jobs in June. That’s an improvement over May, but not nearly as much as expected. Wages are also up. And the nation’s unemployment rate held steady at 4.6 percent.

So the economy has produced more jobs and we’re making more money. That’s good news — the kind the market, likes right? Wrong. Stacey Vanek-Smith explains why some good news just gives investors the blues.

STACEY VANEK-SMITH: These days, good economic indicators are bad news on Wall Street. The reason? Inflation. Any indication of economic growth boosts the likelihood that Federal Reserve Chairman Ben Bernanke will hike interest rates again in August.

WARREN BENNIS: It’s a warning to everybody that inflation is number one on Bernanke’s radar.

USC Marshall School of Business professor Warren Bennis says more jobs mean more disposable income. That means less money going into savings and more going to spending.

BENNIS: It’s really a balance between the amount of disposable income and what this might do to bloat prices and make things unreachable for the average consumer.

Bennis says Bernanke is probably experimenting a bit right now, trying to get a handle on inflation without crushing economic growth. Once that happens, says Bennis, more jobs and more money could become good news on Wall Street again.

I’m Stacey Vanek-Smith for Marketplace.

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