Despite the softness in participation rate, US jobs growth is improving. Ttapering complete euphoria over the recent jobs numbers (best in close to a decade) was Fed Chair, Janet Yellen warning that unemployment remains “elevated.” Despite the softness in the numbers such as participation rate (people that have stopped looking for work and are no longer counted as unemployed) which is also near historical lows, and under-employment (people who take part-time or temporary jobs who are looking for full-time work), the job market is improving. Ms. Yellen did comment that fiscal policy was also a drag on jobs. This arguably must refer to the colossal deficit that America is going to have to come to grips with very soon.
Yellen was also sanguine about the rate of inflation under-performing the Fed’s mandate target of 2%, saying longer-term rates were stable. Despite the pockets of concern, there is little doubt now that a meaningful turnaround has begun. Continued low interest rates, inflation at 2% and unemployment headed under 6% (6.1% currently). Stock markets love the combination.
Compare that to the 11% unemployment rate in the Eurozone and it appears that the “old world” cyclical order is being restored. That is, America was first into recession and is now leading the world out of it. It is a positive segue into the U.S. Independence Day weekend for Americans.