Business

The perfect mix

Wall St. win-win: Wall Street loved the Labor Dept.’s ‘Goldilocks’ jobs report — just the right amount of jobs created and unemployment rate — because it meant Ben Bernanke wouldn’t taper his stimulus plan anytime soon.

Wall St. win-win: Wall Street loved the Labor Dept.’s ‘Goldilocks’ jobs report — just the right amount of jobs created and unemployment rate — because it meant Ben Bernanke wouldn’t taper his stimulus plan anytime soon. (REUTERS)

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This is just right.

That was Wall Street’s Goldilocks response to yesterday’s Labor Department announcement that 175,000 new jobs were allegedly created in the US during May.

Goldilocks, of course, was a pretty naive little girl when she trespassed into the house of the three bears and not only grabbed herself one appropriately warm meal but tainted two other helpings in the process.

Don’t get me started on the subject of criminal trespassing.

The folks on Wall Street often refer to the Goldilocks fairy tale whenever they get an economic number that’s not too hot from an inflation standpoint and not so cold that it might chill economic growth.

Yesterday, Labor reported there were 175,000 new jobs created in May — that’s just a bit more than expected and good news.

Labor also reported the unemployment rate ticked up to 7.6 percent from 7.5 percent — which, on the surface, is seen as being bad news to offset the better-than-expected job growth.

It’s crazy but the tick up in the unemployment rate can also be seen as good news because it means about 100,000 people who were previously too discouraged to look for work suddenly started searching.

While it’s nice to see more people enthusiastic about the economy, the unemployment rate would have been better if those folks had simply stayed out of the job market.

Also, revisions from Labor showed 14,000 fewer jobs were created in March and April — again, not so good.

The perfectly-mixed jobs cocktail pleased Wall Street.

The Dow Jones industrial average jumped 1.4 percent, or 207.50 points, to 15,248.12.

Wall Street figures that the sort of employment growth allegedly seen in May wasn’t so strong that it would cause the Federal Reserve to panic and pull back hard on its $85 billion a month Quantitative Easing (QE) funny money program.

Anxiety over the Fed’s program has been growing recently and the last thing Wall Street wanted was an economic number, top to bottom, that was so good that it forced the Fed to taper.

As I’ve been saying for years, QE has been worthless for fixing what ails the US economy. But it has been helium for stocks, sending the Dow up 16.4 percent this year — while the S&P 500 is up 15.2 percent.

Let’s put Wall Street’s fairy tale aside for a minute and look more closely at the May employment numbers.

For one thing, growth of 175,000 new jobs isn’t particularly encouraging. Believe me, it isn’t.

Economists estimate that at least 150,000 new jobs are needed each month just to absorb people who want to join the work force for the first time.

And in a month like May, when millions are graduating from colleges and high schools, the break-even figure is a lot larger.

Wall Street’s satisfaction with the 175,000 figure has more to do with expectations.

Twenty-four hours before Labor released its number, ADP, which doesn’t include government job gains and losses, reported a very disappointing 135,000 growth in private sector jobs in May.

That took Wall Street’s expectations for the Labor number lower — making the 175,000 seem very solid.