Headwinds

By Isaac Cohen*

                  The labor market in the United States rebounded in June with the creation of 224,000 new non agricultural jobs, which contrasted with the revised figure of only 72,000 new jobs created in May. This shows that conclusions should not be drawn based on one month figures. For instance, average monthly job creation in 2018 was 223,000, while during the first six months of this year the same average decreased to 172,000. This indicates that job creation is cooling down, to which may be contributing the vanishing of the stimulus provided by the tax reduction approved in 2017. Also, on July 3, the GDPNow model, from the Federal Reserve Bank of Atlanta, estimated a rate of real economic growth of 1.3 percent for the United States, during the second quarter of 2019, less than half of the vigorous yearly rate of growth of more than 3 percent in 2018. https://www.frbatlanta.org//media/documents/cqer/researchcq/gdpnow/RealGDPTrackingSlides.pdf

                  The question is how the Open Market Committee of the Federal Reserve will interpret the latest figures, during its next meeting at the end of this month. For instance, last Friday, markets went down, upon the announcement of vigorous job creation in June, because investors saw the figure as less justification for the central bank to lower interest rates. Still, the Monetary Policy Report by the Federal Reserve, released also last Friday, recognizes that there are headwinds, such as the current trade confrontations and a general slowdown in global demand.

https://www.federalreserve.gov/publications/files/20190705_mprfullreport.pdf

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

About Ramón Jiménez

Ramón Jiménez, Managing Editor de MetroLatinoUSA.Com (MLN). Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia (UDC). Email: [email protected]

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