Less Impulse                     

Photo: sevte&Costore

 

By Isaac Cohen*

Judged by the creation of 390,000 new jobs in May, revealed last week by the Labor Department, employment continues expanding vigorously in the United States, with the unemployment rate at 3.6 percent, the same as in April. However, last month’s figure was less than 436,000 new jobs created in April and even less than last year’s average monthly job creation of a half a million jobs.

Also, less impulse can be found in other sectors. For instance, consumer spending in April slowed down and retail lost 61,000 jobs in May. By contrast, the leisure and hospitality sector increased hiring in preparation for the summer, anticipating of increased expenditures in services. Another indicator of a slowdown are home sales decreasing almost 6 percent in April, while the 30-year mortgage interest rates increased 2 percent since the start of this year.

It is early to know if the tightening of monetary policy started by the central bank is already contributing to the loss of impulse in those sectors mentioned above. Meanwhile, more tightening is expected to continue, with interest rates reaching a range of 1.75 to 2 percent by the end of July. Additionally, last week the Federal Reserve started reducing its asset portfolio of almost $9 trillion. The question is if all this tightening can be performed without increasing unemployment.

*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.

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