Banking giant JPMorgan Chase warns that cracks are beginning to appear in various sectors of the US economy, even as the headlines remain upbeat.
In a new CNBC interview, JPMorgan chief global strategist David Kelly says that hard data is suggesting that the US economy is losing steam despite adding 139,000 jobs in May, beating expectations, and keeping the unemployment rate steady at 4.2%.
But under the hood, Kelly points out that the Labor Department revised down job gains in March and April, while noting that the US lost hundreds of thousands of jobs last month.
“This was a lot softer than the headlines suggested. To me, the one issue is that we saw over 600,000 jobs lost according to the Household Survey. That’s very volatile, but that was a negative signal.
The other thing is cutting 95,000 [jobs] out of the prior two months.
So we’ve only averaged 124,000 jobs so far this year, per month, for the first five months of the year. It was 168,000 last year.
When I’m looking at a lot of data, this slowdown is gradually seeping up and spreading across the economy. I think we’re missing it because we’re looking at headline payroll numbers or the weirdness in terms of trade and GDP. But this economy is gradually slowing down here.”
Data from the Pennsylvania-based lender PNC Bank shows that the number of adults working or looking for work dropped by 625,000 in May, effectively negating the number of jobs lost in the same month.
According to the bank, the labor force contraction may indicate that “potential workers are becoming discouraged.”
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