United States

Research evidence excerpt

United States

a reason to adjust our way to 1.2%. Several data points make the case for greater

2H employment forecast, as we had already anticipated some strength than the GDPNow estimate: private hours worked

of these developments. Our 100k per month 2H payroll out- rose 1.3% in 2Q, the best in a year; there could yet be another

look is now well aligned to recent trends, with 2Q at 111k, swing in the trade balance in the June data; and there is now

and our projection that the unemployment rate would fall to some small upside risk to our 2.0% consumption forecast. In

4.2% in 3Q is attainable as it has already hit that rate in June. any case, private domestic final demand still looks healthy

and could be on track to grow well over 3%.

On balance, we continue to see the Fed remaining patient and

holding rates steady all this year, though there are both hawk- Steady trends in the employment report

ish and dovish ways to interpret this report. The hawkish take

is that the unemployment rate is still falling, a signal that in a Coming into the June employment report, the three-month

world of uncertain breakevens the labor market is tightening average for payroll growth had surged to 188k, compared to

on the margin. That should further reduce concerns about an average of 10k last year. Even as a range of employment

downward risks to the labor market, allowing FOMC partici- data had turned markedly better, we were cautious about

pants to pivot their focus toward inflation, which all partici- assuming that was the new normal, especially given more

pants have affirmed is too high—as next week’s FOMC min- subdued alternate metrics like ADP. Thus, although June’s

utes should confirm. 57k increase came in below our 125k forecast, the published