Must-Read: Dean Baker: Job Growth Slows Sharply

Must-Read: I am trying to think of rational state-dependent monetary policy algorithms—even semi-rational state-dependent monetary policy algorithms. I can think of none that would take the last three months’ worth of data, and say that it is appropriate to reverse the surprise 25 basis point March Federal Funds rate increase. I can certainly think of none that would say that it is appropriate to double down by another 25 basis point rise this month.

And yet the FOMC looks highly likely to raise interest rates this month. Go figure:

Dean Baker: Job Growth Slows Sharply: “the overall employment-to-population ratio (EPOP) dropp[ed] from 60.2 percent in April to 60.0 percent in May… http://cepr.net/data-bytes/jobs-bytes/jobs-2017-06

…The establishment survey showed further evidence of a weakening labor market, as the pace of job growth slowed in May to 138,000… [as] substantial downward revisions to the prior two months’ job growth numbers, which brought the average for the last three months to just 121,000. The big job gainers were restaurants (30,300) and health care (24,300)… 40 percent of job growth in May. Job growth in restaurants… 22,000 average for the last year… [and] health care… 30,000…. Other job gainers were education services… 14,700; temporary employment… 12,900… professional and technical services… 10,900 jobs. Employment growth in education services is erratic, so the May number is likely to be followed by a decline next month…. The weak employment growth in professional and technical services is disappointing….

Retail trade shed another 6,100 jobs, its fourth consecutive drop. The job loss is concentrated in the department store sector…