Why We’ll Bounce Back From a Weak Jobs Report
There are a few good reasons why the jobs numbers released by the Labor Department were broadly weak – and why they’re likely to improve in the months ahead, says Bob Hughes, senior research fellow at the American Institute for Economic Research.
The economy added just 126,000 jobs for the month, leaving the unemployment rate unchanged at 5.5 percent.
The weakness in the report “reflects a confluence of negative forces,” including the rising dollar that hurts exporters, the plunge in crude oil prices that has hurt the energy industry, disruptions from the west coast port labor issues, and lingering effects from harsh winter weather, Hughes said.
“We continue to expect most of the negative impact from these forces to diminish in the months ahead,” Hughes said.
Rising household wealth and consumer confidence, which is still solid, should boost consumer spending, he said. It will also help real GDP growth speed up in the second quarter, from what is likely to be a “very weak” first quarter rate, Hughes said.
This report will give the Fed added caution when it comes to removing support for economic growth, he said. The Fed will delay the first rate increase as long as possible, and then raise rates at a gradual pace, he said.
