So, the question really is (as usual with employment numbers): Did the number of people who got jobs offset the number of people who stopped looking and have “exited” the workforce, but would gladly re-enter if the job search weren’t so fruitless? In other words, does unemployment look good as a mirage that will bite us back in the coming months, or is it really something to be excited about?
Either way, being that this unemployment report is one of the measures the Fed uses to decide direction/timing on rates, these latest numbers are likely to affect rates in the coming months, regardless of the background details. Prep your portfolio now to weather more change!
The bigger news is the unemployment rate that has dipped below 4%. Low unemployment is likely to intensify employers’ struggles to find workers and push up wages and inflation. If the fall in the jobless rate persists, it could make the Fed more likely to raise rates four times this year rather than the three it has forecast.