By Isaac Cohen*
The Labor Department announced, last week, the creation of 164,000 new nonfarm jobs in April. The unemployment rate decreased to 3.9 percent, from 4.1 percent for the previous six months, the lowest level in 17 years. Job creation has been sustained for 91 consecutive months, since October 2010, as the US economy slowly pulled out of the Great Recession until last April. This is the longest stretch of job creation ever registered.
Based on these figures, it is tempting to conclude that the economy has now reached full employment, but wages have not increased enough to allow such a conclusion. Additionally, since the central bank adopted the objective of 2 percent inflation, in 2012, prices have remained under that goal, until last March. Last week, the Commerce Department said the price index for personal consumption expenditures increased to 2 percent, from a year earlier.
Also, it used to be that inflation was expected to rise as unemployment decreased, known as the Phillips curve. However, as Princeton Professor and former Vice Chairman of the central bank Alan S. Blinder said, in the Wall Street Journal on May 4, 2018, the Federal Reserve “needs to know whether the Philips curve has died or has just taken an extended vacation.”
*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.
