Fed's Nightmare Arrives: Weak Jobs, High Inflation
The Federal Reserve's worst-case scenario may be unfolding after a sharply weaker-than-expected US jobs report landed just days after inflation accelerated above 4%, says the CEO of global financial advisory giant deVere Group.
The comments from Nigel Green come after the US economy added just 57,000 jobs in June, far below expectations, while April and May payrolls were revised sharply lower.
The unemployment rate edged down to 4.2%, but average monthly job growth over the past year has slowed to just 36,000.
The figures come less than a week after the Federal Reserve's preferred inflation measure rose to 4.1%, more than double the central bank's 2% target.
Nigel Green says:
He continues:
AdvertisementThe June employment report points to a labour market that is losing momentum more quickly than many investors anticipated. Hiring slowed sharply, previous gains were revised lower and several sectors showed little or no growth.
Yet inflation remains stubbornly high.
He argues that investors have repeatedly underestimated the complexity of the current economic cycle.
The CEO of deVere Group says the implications go way beyond monetary policy.
He notes that while financial markets are likely to increase expectations of future rate cuts following today's report, Federal Reserve officials are unlikely to focus on employment data alone.
Nigel Green concludes:
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