Comment on U.S. Bureau of Labor Statistics Employment Situation Report
Kathy Bostjancic, Director of Macroeconomic Analysis, The Conference Board

May’s 69,000 gain in jobs is the third and biggest disappointment so far. This adds significant downside risk to the economic forecast for the next couple of quarters. The only positive sign is that consumer spending is stronger than in 2011, and housing is less of a drag on economic growth. But going forward, wage growth will be at least as important as job growth. Any pickup in wages will put a floor beneath consumer sentiment and spending. This could, in turn, fuel moderate employment gains in “core” services (which excludes health and education). On the other hand, if consumers lose hope in improved job and income prospects ahead, they are likely to start paring discretionary spending — thereby further prolonging the period of weak labor gains and soft overall economic growth.