Is the Federal Reserve, which has been signaling a rate increase in the “coming months,” really going to do so after last week’s lousy May jobs number?
And if the jobs economy, which has been one of the few bright spots in the economy lately – that is, of course, if you ignore the 94 million or so adults not working – is as soft as the report indicates, will the Fed be able to raise rates at all this year?
To my way of thinking, the Fed has only until September if it’s going to raise rates this year. After that, we’ll be in the final two months of the presidential election campaign, and there is no way the Fed is going to make any moves then, especially if such a move were to jeopardize the chances of Janet Yellen’s party’s nominee.
Following the awful May jobs report, I think we can pretty much dismiss the idea of a rate increase at the June meeting, now less than two weeks away. July remains a possibility, but there will have to be an awful lot of improvement in the economy by then, and there’s not a lot of time between now and then. There is no meeting in August, so that leaves the September 20-21 meeting as the only real possibility, and even then the odds in favor of a move less than two months before the election are pretty small.
Just how bad was the May report? Continue reading "Lousy May Jobs Report Makes Fed Increase Unlikely This Year"