Strong Jobs Report Equals Inflation

The May Jobs Report was released last Friday with these results-
· Our economy added 559k new jobs in May.
· The household survey showed 444k new people found jobs and the labor force shrank by 53k. This caused the unemployment rate to drop to 5.8% from 6.1%.
· The U-6 Rate dropped to 10.2%
· Over the last 40 years our average unemployment rate has been 6.2% and we are now below that. The laborforce participation rate dropped by 0.1% to 61.6%, down from 63.3% pre-Covid.
· Average hourly earnings increased by 0.5% in May.
· We still have 7.6 million fewer people employed today than before Covid.

The reason for this is NOT demand from employers as nearly employer is looking to hire. The problem is SUPPLY, NOT ENOUGH PEOPLE WANT TO WORK. Peter Boockvar, one of my favorite Reads every week said this, “As for the Fed, if the only thing they are going to look at in driving monetary policy is the almost 8 million (employees) that are not back, they are not doing their homework. The economy is running TOO hot and stagflationary situations are popping up left and right.”

I totally agree and if the Fed and Congress don’t make changes inflation is going to run rampant soon and don’t be surprised if mortgage rates are above 5% next year.