The official US government data confirmed payrolls increased by only 139,000. May job numbers disappointed, given the consensus or estimate was for 185,000 jobs.
“All of the net new jobs that were added, were part-time jobs. We actually lost 367,000 full-time jobs during the month of May. That is the biggest decline in full-time employment in three years.”
May Job Numbers Spell Bad News for U.S. Economy
Schiff explains, that in addition to May’s jobs numbers, the 211,000 jobs created last month was revised down to 174,000. The silver-lining was that the unemployment rate fell to a 16-year low of 4.3%. The unemployment rate dropped because of workers leaving the labor force. In fact, a total of 429,000 people dropped out of the labor force in the month of May. This resulted in the labor force participation rate falling to a new record low of 62.7%.
On trade, the US deficit for April was expected to be $46.1 billion, but instead ballooned to $47.6 billion. Schiff notes that revisions to the trade deficit will continue to change past GDP reports.
Schiff thinks the current forecasts of about 3% GDP will have to be revised to 2% and, then ultimately, 1%. He evaluates the chances of a June rate hike by the Fed. Peter believes the weak employment and trade should be weighing on the Fed’s decision.
On a potential rate hike, Schiff notes, in conclusion,
“I think the Federal Reserve is clearly afraid to admit that it’s wrong. Afraid to acknowledge how much it’s overestimated the strength of GDP. Afraid to admit that based on its own criteria the rate hikes were a mistake. Because look, if we’re going back into a recession then clearly the Fed shouldn’t have raised rates, based on their Keynesian view of the world.”
Schiff also talks about gold and the comparison between today’s economy and that of the 1930s.
