By Isaac Cohen*
The US unemployment rate increased from 3.8 percent in May to 4.0 percent in June, for a good reason. A bit more than 600,000 persons entered the workforce in June, looking for jobs, while employers created 213,000 new jobs and three fourths of those who found jobs were new entrants to the workforce. This indicates the economy is expanding at a vigorous pace, with second quarter growth projections at around 4 percent.
In this year’s first half, 1.03 million persons have returned to the workforce, compared to 496,000 and 589,000 in the same period of 2017 and 2016, respectively. Also, the US economy has created new jobs during 93 consecutive months, the longest employment expansion on record.
Even so, salaries have increased close to the rate of inflation, which means that workers have not seen the boom reflected in their paychecks. Average hourly earnings in June increased only 2.7 percent, since most of the new jobs created were for workers without college education.
. However, ominous signs are appearing in the business sector, indicating that the increased confidence generated by last year’s tax cuts is vanishing rapidly. For instance, the Dow Jones Industrial Average has lost all the 2018 gains and is approaching a 10 percent correction, mainly due to the bipolar trade policy emanating from the White House.
*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.
