The Labor Market Remains Too Strong For Fed Easing

Summary

• May saw 139,000 new jobs, slightly above expectations, and the unemployment rate held steady at 4.2%, matching the Fed's full-employment estimate.
• Labor market indicators show normalization: jobless claims are rising but not signaling a recession, and long-term unemployment is declining.
• Labor force participation is shrinking, with 800,000 adults leaving in May, keeping unemployment rates low but potentially masking underlying slack.
• Given these trends, I see no labor market-driven reason for the Fed to change monetary policy at its upcoming meeting; projections should remain steady.

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Introduction

Earlier this morning, the Bureau of Labor Statistics reported the employment data for the economy during the month of May. In May, the US economy created 139,000 jobs, which was slightly higher than expected. Over the last twelve

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