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The U.S. economy added 217,000 jobs in May, but vast numbers of discouraged job-seekers and sluggish wage growth means that it will be a long time before the Federal Reserve raises interest rates.

For investors, it means that the bond market has been right in its assessment of the economy: Activity is too low to support higher interest rates or produce inflation.

The unemployment rate remained unchanged from April at 6.3%, but many observers dismissed the importance of the unemployment rate. "I think that, clearly, the Federal Reserve has told us that it doesn't watch the unemployment rate," says Mark Hamrick, Washington Bureau Chief for Bankrate.com. "The rate fell in April because people gave up looking for work."

Discouraged workers -- those who have given up looking for jobs -- remained at 3.4 million, a rate the Federal Reserve views as too high to threaten inflation or push wages higher. "I'm looking for some sign the economy is getting tight before we can start thinking about raising rates," Federal Reserve Governor Jerome Powell said Friday in London.

A big pool of unemployed people means that you're unlikely to get a big raise any time soon, and that means that you're also unlikely to go on a spending spree. Consumer spending drives the bulk of the U.S. economy. And you can't have an inflationary wage-price spiral without higher wages.

Absent wage hikes, any increases in prices -- such as from food or energy, which the Fed can't control -- means that workers will have to cut back on spending. And that means muted growth.

For investors, that means low short- and long-term interest rates. The Fed controls short--term interest rates, which means that money market yields and bank CD yields won't move much from current levels, currently between zero and 1%. "You're not going to see any change in Treasuries or mortgage rates," says Tom Gimbel, CEO of LaSalle Network.

The best upside of the report: Monthly employment gains in the 200,000s are better than those in the 100,000s, and that will contribute to a sense of optimism among consumers and employers, Gimbel says."People complain the job quality is not as good, but the fact is that more people are getting paychecks,"' he says. "That's a major step in recovery."

Stock futures rallied on the news, because higher employment is good for spending. At the same time, Treasury yields remained muted, because the likelihood of inflation remains low. In short, while the news is good, the outlook for investors remains relatively unchanged.

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