We're still several months away from job growth catching up with labor force growth and driving the unemployment rate back down, but that's really just a matter of time. Our economy is moving again, and once that happens it's actually quite hard to stop the forward momentum.
Unless we're missing something, the unemployment rate will be shooting back up again very soon.
Today's rate cut was no surprise. Even the half-point cut was more or less expected. In fact, the economy is still weak enough for the Fed to feel free to keep easing.
It would be kind of like when they put through a substantial emergency rate cut when the market crashed in 1987. I don't think it is evidence of panic to treat what happened yesterday as an emergency. It's an emergency on many levels.
The rise in wages of 6 cents might cause jitters, but wage inflation is less of a worry now, especially with productivity still growing at a healthy clip. As the economy slows, the unemployment rate will continue to inch up and wage pressures should ease further.
The moment they think there are jobs there, they'll be out looking and the employment rate will start heading up again. I think that's on the whole a good sign at this point in the cycle.
It takes something on the order of 150,000 new jobs a month to absorb the natural increase in the labor force. As long as we keep getting smaller positive numbers than that, the unemployment rate should be trending up rather than down.
I'd say there's only a 25 percent chance of a rate hike in June even. Even with another strong jobs report Friday, they'll want to have something that looks more definitely like a trend.
The unemployment situation won't truly improve until businesses increase hiring a lot more than they did in February. It takes roughly 150,000 new jobs per month just to keep the unemployment rate steady, as population growth increases the work force.