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Augustine Faucher, VP and senior macroeconomist at PNC Financial Services, on Friday’s jobs report and why economists got it so wrong.
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And Aaron let's talk fret about what's gone on here joining us now to dig further into the numbers PNC Financial Services Group vice president and senior -- macro economic economist.
-- -- -- How so many people get this number so wrong so many analysts were expecting 150000.
Jobs we -- and sell off what happen.
I'm not quite sure I mean the unemployment insurance claims they've been around 370000.
Per week so that's consistent job growth around -- 150000 per month.
Some of the indicators we've been -- on construction and manufacturing.
They haven't -- this off so the -- just came in you know very surprising and we're still trying to figure out exactly what happened.
Gusts.
DC said this may you know -- put pressure again for more QE but.
Really isn't that just somewhat of -- -- does suggest it's to boost confidence and and that is gonna do that much good we've already had a lot of cheap money in the system.
Well I I don't think the Fed it's gonna take a step at least in their June meeting I think what they're going to do is they're going to wait and see how things look.
When they meet again in August and then they might make a decision about quantitative easing.
But certainly long term rates right now are very low they've come down in the wake of this bad employment report.
So it's unclear how much further the Fed can go and pushing down longer term rates and obviously short term rates are basically at zero so it's unclear what they can do there as well.
You know these numbers -- clearly show that there's a -- -- the momentum of the recovery we have all the uncertainty coming down the -- Global economic slowdown India China Europe you name it he's still have your GDP forecast at 2.4 percent you're keeping it there.
I think we're probably going to bring that down a little bit I would expect that -- Arjun vote forecast comes out and a weaker so it's going to be closer to 2.2 percent herself.
Will probably lower our forecast for job growth as well with average monthly gains of about a 165000.
Per month.
Down from about a 180000 per month before.
And yet to pick up on Tracy's by -- lot of uncertainty out there by it was a small business on a I'll be very -- press are actually higher right now with the questions over taxes health care expenses.
What's it gonna take to get this country rolling again what's it gonna take to get jobs created.
Well -- I mean we are still creating jobs in demand continues to increase for seeing a turnaround in the housing market.
So we should expect to see construction employment follow -- manufacturing does continue to expand.
So what I think what we're going to see is businesses are just going to find themselves so stretch that they're going to be unable to meet this stronger demand without hiring.
So I would expect to see job growth pick up from -- in the market coming from happening where's it coming well obviously -- it was still had.
Consumers are still very uncertain about their job and also housing still has a long way to go to -- gets turned around.
-- well I think housing is starting to turn around starts -- up we started to see prices move higher.
We're seeing some pockets of the country where demand is deftly picking up in the housing market.
We saw gains in consumer spending in in April.
There is enough income growth for consumers to continue spending -- -- businesses are very profitable.
They're continuing to invest so we think the demand is there it's a question of whether we're going to get in that sweet spot where we have job growth that follows the stronger -- I mean that's just seeing the Dow new buzz -- just -- -- down to seventy and the Dow them most people very bearish you're taking kind of the contract inside here then.
I know I don't -- I'm taking a contrary inside I'm simply saying that growth is expected to be -- moderate over the next year or so.
That consumers do continue to increase their spending they're gonna get a benefit from lower gasoline prices boils down to 83 dollars a barrel.
So that'll help consumers and particularly I think we'll see real wage growth that will help support consumer spending.
Because we're certainly not seeing that personal income completely unchanged -- hours worked and chains I guess the bright spot is that gas is gunned down.
-- let's say thank you so much affidavits out -- you with us.
Thank you.
