This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Employment Report: More Bad News For Savers

June 1 marked the release of perhaps the most closely-watched piece of economic data in a month, as the Bureau of Labor Statistics (BLS) released its employment report for May. The result was a crushing disappointment that sent the stock market into a tailspin and raised urgent questions about the viability of the current economic recovery.

Job growth fades

The BLS reported that non-farm payrolls increased by only 69,000 in May. They also revised the job growth numbers from the prior two months sharply downward, meaning that the employment market has been even weaker than previously thought.

Economic statistics can often be somewhat esoteric, but the trend in employment does not require any special knowledge to be clearly understood. Running in order from January to May, the monthly job growth figures so far this year are as follows: 275,000, 259,000, 143,000, 77,000 and 69,000. To add some perspective to this, January's creation of 275,000 new jobs was generally considered good, but not spectacular. Having the numbers tail off from there indicates that the economy has lost the modest momentum it had at the start of the year.

One reason the employment report is being followed with particular intensity is that job creation is both an indicator of business expansion and a potential source of new fuel for the economy. Fewer people going back to work means fewer new paychecks to be spent, and the economy lacks other sources of growth to feed it. After years of low personal savings rates and high debt levels, mere consumer confidence would not be enough to drive the economy, and with slowing growth being a global theme at the moment, exports are not a source of optimism either.

It isn't just stock market investors who will feel the pain from the slowing economy. Long-suffering savings account customers must resign themselves to the fact that there is little hope on the horizon for bank rates to rise above their current near-zero levels.

Pleas for action from the Fed

The disappointing jobs report evoked cries for new monetary policy initiatives from the Federal Reserve in the hopes that these might spur the economy. The problem is that with both short and long interest rates already extremely low, there is little room for the Fed to maneuver, and little indication that low interest rates are providing any stimulative benefit. Even so, expect the deteriorating employment picture and possible policy initiatives to address it to be the center of attention at the Fed's next Open Market Committee meeting on June 19 and 20.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%
YHOO $36.01 -1.42%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs