U.S. Labor Department Reports Job Growth Slowed

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• RAY SUAREZ:

  People often look to the government monthly jobs report for a sense of how things are going in the economy, and today's report sent some mixed signals. There were fewer new jobs than expected, but wages over the last year grew by 3.8 percent, the fastest pace since 2001.

  Other indicators in the last few weeks suggest the economy has been steadily improving: Gross domestic product, or GDP, grew by just under 5 percent in the first quarter of the year. Consumer spending and business investment were also up in the first three months of year.

  But there are some caution signs, too. Interest rates are rising. Some segments of the housing market are getting weaker, along with consumer confidence, and oil and gas prices remain high.

  For more on what this all means, I'm joined by William Spriggs, chairman of the Department of Economics at Howard University, and Nariman Behravesh, chief economist for Global Insight, an economic forecasting firm.

  And, Nariman Behravesh, let me start with you. With slow job creation but steady unemployment, low consumer confidence but strong consumer spending, how do you take some sort of overall trend out of such a mixed bag of numbers?

• NARIMAN BEHRAVESH, Economist, Global Insight:

  As you were saying, the economy is giving off some very mixed signals, but when you put it all together, there's still a fair amount of good momentum in the economy.

  I tend to discount today's jobs growth numbers; there were some fluky parts to it. And so I think probably the number was closer to 200,000, when you sort of adjust for those statistical flukes. So, all in all, we're looking at an economy that's doing fairly well.

  The worrisome part of today's report really was on the inflation front, as you were saying, which is that wage inflation looks like it's picking up. That sort of confirms other data from the CPI and the GNP numbers that suggest, in fact, that inflation may be sort of moving upward a little bit. And that's a source of concern, not just us economists, but also to the Federal Reserve, more importantly for the Federal Reserve.

• RAY SUAREZ:

  Professor Spriggs, what do you think?

  WILLIAM SPRIGGS, Department of Economics, Howard University: Well, actually, I think that it shows that the market, the labor market, is still fairly weak. And hopefully, what the Fed will do is look at these numbers — while it's true that the average wage numbers reported today were up, they're probably only up as much as inflation. Inflation numbers have been running pretty close to this.

  If you look over this recovery over the last five years, productivity has been up tremendously. And, typically, we expect to see wages increase with productivity, and we've seen wages be flat over this four- or five-year period. So I think it shows some weakness.

  Today, we saw a mix in jobs change. So, fortunately, the economy was generating some jobs that are higher-wage jobs. There were losses reported in retail sales, but gains in manufacturing and gains in professional services. Those are higher-wage sectors.

  If you look at the employment cost index, which controls for how things shift, then you see that wages were weak in the latest report. So I don't think we're seeing inflationary pressures from what we've seen from wages.

  This is five years into a recovery. And at this point, we should actually see more jobs, and we should have seen wages actually recover by now from where they were in 2001. So I think we are in a very tenuous position and, hopefully, the Fed will think about the downside risk, namely that all of this consumption has been taking place through debt and that consumers are carrying a very heavy amount of debt.