Wall Street estimates the economy created 175,000 new jobs in June — mediocre by historical standards but perhaps too much for the schizophrenic financial markets.
The unemployment rate is expected to remain at 7.6 percent ahead of the government’s monthly jobs report tomorrow.
As I’ve been saying, the June jobs figure is always boosted because the Labor Department assumes that a large number of newly formed companies are being missed by its surveys.
So the computers come up with a big fudge factor, which should add around 122,000 to tomorrow’s count before seasonal adjustments.
Economic growth was recently revised downward sharply for the first three months of this year. And the second-quarter gross domestic product doesn’t look like it’ll be much better than the first quarter’s.
So those jobs that Labor thinks are being created by new companies may turn out to be phantoms.
The bigger question is, how will investors and the Federal Reserve react if the jobs report is stronger than expected? Will interest rates spike because of fears that the Federal Reserve will stop the wanton printing of money?
Here’s my guess: Investors will be too hung over from July 4th festivities to care what the Labor Department says.