Is the economy better than we think?
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KAI RYSSDAL: Jobs, jobs and more jobs. The Labor Department reported this morning 132,000 of them were added to the economy last month. Equally impressive were the 75,000 jobs government statisticians said they missed in the April and May counts.
None too shabby for an economy that’s supposed to be staggering under the weight of a collapsing housing market and ever-present fears of inflation. The unemployment rate held steady to boot, at 4.5 percent. All of which, when taken together, pose this question: If companies can still generate jobs when the economy’s supposed to be stalling, is that perhaps a sign that things are better than anybody thinks? Our Washington bureau chief John Dimsdale has went looking for some answers.
JOHN DIMSDALE: The economy appears to be rebounding strongly from the anemic 0.7 percent growth in the first three months of the year. Given today’s unemployment report, Global Insight economist Nigel Gault thinks the economy grew 3 percent or more in the second quarter.
Nigel GAULT: If the economy was going to keep growing at a 3 percent-plus rate, the Fed would be worried. And there would be a strong likelihood they would have to raise interest rates. I think, myself, it’s unlikely the economy will keep that pace going in the second half.
Gault expects the weakness in housing construction caused by foreclosures in the subprime mortgage market to take some of the steam out of the economy.
The White House hailed today’s report as the 46th-straight month of job growth. But Christian Weller at the Center for American Progress says the economy is only sputtering along.
Christian WELLER: We find ourselves, I think, in that era of lowered expectations where a report with only 130,000 new jobs is heralded as accelerated growth or robust economy. It’s neither one of those. It is really a moderate pace at best.
A pace that prompts many to predict the Fed will leave short-term interest rates alone for the foreseeable future.
In Washington, I’m John Dimsdale for Marketplace.
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