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close video Probability for July rate cut falls on strong jobs data

NewEdge Wealth chief investment officer Cameron Dawson discusses seasonal stretch as investors eye the presidential cycle for stock guidance on ‘Making Money with Charles Payne.’

U.S. job growth unexpectedly surged in May, as the labor market remained surprisingly resilient even in the face of rising interest rates, declining economic growth and chronic inflation.

Employers added 339,000 jobs in May, the Labor Department said in its monthly payroll report released Friday, easily beating the 190,000 jobs forecast by Refinitiv economists. That also marks an increase from April, when payrolls increased by an upwardly revised 294,000. 

At the same time, a separate report based on a smaller survey of households offered a slightly different picture of the labor market. The report indicated the unemployment rate climbed to 3.7% from 3.4%, even though the labor force participation rate remained unchanged last month. It was the highest jobless rate since October 2022 and the biggest increase since the early days of the COVID-19 pandemic.

Wage growth also cooled last month, with average hourly earnings – a key measure of inflation – rising 0.3%, in line with estimates. On an annual basis, wages rose 4.3% in May.

MAJORITY OF WORKERS REGRET QUITTING DURING ‘GREAT RESIGNATION'

The Federal Reserve indicated it is closely watching the report for evidence the labor market is finally softening after more than a year of interest rate hikes. 

Over the past week, some central bank officials have signaled they may skip another rate hike at their meeting that begins June 13 as they examine how tighter monetary policy is affecting the economy. However, some officials have hinted they are open to raising rates for the 11th straight time.

THE HOUSING RECESSION ISN'T OVER YET

The surprisingly strong job gains in May, when coupled with the spike in unemployment and the slowdown in wage increases, may provide fodder for both sides of the debate.

"The tug of war taking place in the economy is on full display in today’s mixed job report and keeps pressure on the Fed to remain hawkish, even if it gives them a reason to pause later this month," said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

Construction workers on a job site on May 5, 2023, in Miami. (Photo by Joe Raedle/Getty Images / Getty Images)

Job gains were broad-based last month, with the biggest gains in professional and business services (64,000), government (56,000), health care (52,000), leisure and hospitality (48,000) and construction (25,000).

Still, the outlook for the labor market remains hazy. 

A spate of bank collapses this spring is threatening to further restrict economic growth and hiring by tightening lending standards and making it more difficult to acquire a loan. Borrowers may have to agree to more stringent terms like high interest rates as banks try to reduce the financial risk on their end. Fewer loans, in turn, would lead to less big-ticket spending by consumers and businesses.

SILVER LINING OF HIGHER INTEREST RATES: SAVINGS ACCOUNT RATES

Fed Chair Jerome Powell said last month that tighter credit conditions are likely to weigh on economic activity, including hiring and inflation. 

Now Hiring signs are displayed in front of restaurants in Rehoboth Beach, Delaware, on March 19, 2022. (Photo by STEFANI REYNOLDS/AFP via Getty Images / Getty Images)

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There has also been a wave of notable layoffs over the past few months, and the list continues to grow. Amazon, Apple, Meta, Lyft, Facebook, Google, IBM, Morgan Stanley and Twitter are among the companies letting workers go.

For many economists, the possibility of unemployment rising has become a question of when, not if.

The central bank previously projected in March that the jobless rate will climb substantially higher to 4.6% and remain elevated in 2024 and 2025 as steeper rates continue to take their toll by pushing up borrowing costs. That could amount to more than 1 million job losses.

Hiking interest rates tend to create higher rates on consumer and business loans, which slow the economy by forcing employers to cut back on spending.

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Dabo: ‘Feel everybody’s pain’ in Tigers’ 1-3 start

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Dabo: 'Feel everybody's pain' in Tigers' 1-3 start

Clemson coach Dabo Swinney said he felt a “pain that’s hard to describe” following his team’s 34-21 home loss to Syracuse on Saturday, which dropped the Tigers to 1-3 and his worst start as the Tigers’ head coach.

“This is a bad, bad feeling. Terrible,” Swinney said. “This is what we do. This is our passion. We work incredibly hard to get results that we want to get, and when we don’t get them, it’s a pain that’s hard to describe, but it comes with the territory. So we gotta flush it. That’s all we can do. There’s no hope for a better yesterday.”

Clemson closed as a 17½-point favorite at ESPN BET but suffered its largest home loss against an unranked opponent since 2001 against North Carolina, when the Tigers lost by 35.

With losses to LSU, Georgia Tech and now Syracuse, the Tigers have lost three of their first four games for the first time under Swinney. It’s also the first time the program has started 1-3 since 2004.

Swinney conceded he was emotional on the field after the game during the school’s alma mater.

“Disappointed, painful, hurt,” he said. “I’m human. I’m not a cyborg. This is my life. I’ve been here 23 years. I love this place. I give this place the best I’ve got every single day. … I’ve invested my life here, and when I don’t get the job done, I’m responsible. I feel the pain. Not just my pain, I feel everybody’s pain. That comes with my job, and I don’t run from that.”

Clemson finished with 503 yards, its most in a loss since 2016. It’s a stunning start for Clemson, which returned the most production in the FBS (80%) this season. Quarterback Cade Klubnik has his top three receivers back from last year’s ACC championship team, and the defense was expected to be one of best fronts in the country.

“We just can’t seem to put it all together when we need it,” Swinney said.

The Tigers have a bye week before traveling to North Carolina on Oct. 4, and Swinney said it comes at a good time because the team is “beat up emotionally and physically.”

“There’s no quit in me and I didn’t see any quit in our team or our staff,” he said. “We’ll get back to work. We have to reset our goals and what we still can do. We can’t sit around and dwell on missed opportunities. … It’s basically an eight-game season for us at this point. We’ve just gotta fight our tails off to find a way to win a game, create some momentum.”

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Badgers AD backs team amid ‘Fire Fickell’ chants

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Badgers AD backs team amid 'Fire Fickell' chants

Wisconsin athletic director Chris McIntosh voiced his support for coach Luke Fickell and the program Saturday after Maryland handed the Badgers a 27-10 home loss, which featured several “Fire Fickell!” chants by the student section.

Speaking with the Wisconsin State Journal and Milwaukee Journal Sentinel, McIntosh shared his “belief in the program and the people around our program, specifically Luke,” and reiterated his support for the players. Fickell fell to 15-15 in two-plus seasons as Wisconsin coach after consecutive losses to Alabama and Maryland. He is under contract through the 2031 season and is earning $7.7 million this fall.

The Badgers were booed as they headed to the locker room down 20-0 to Maryland at halftime and didn’t reach the end zone until 28 seconds remained in the fourth quarter.

“When you have kids that have given it all and are faced with, as a program, adversity like this, I think it’s a time for our people to come together,” McIntosh told the two outlets. “I think it’s a time for me to express my support.”

McIntosh, a former Wisconsin offensive lineman, fired coach Paul Chryst midway through the 2022 season and hired Fickell, who guided Cincinnati to the College Football Playoff in 2021. Although Fickell had no direct ties to Wisconsin — unlike Chryst and Jim Leonhard, the team’s interim coach in 2022 — Fickell’s hire was largely celebrated.

The Badgers have endured several quarterback injuries during Fickell’s tenure but could be in danger of missing bowl games in consecutive seasons for the first time since a stretch from 1985 to 1992. Fickell is 78-40 as an FBS coach.

McIntosh acknowledged the fans’ sentiment, saying, “Apathy is worst case, and so we’re far from that.” He also said he isn’t concerned about his job security. McIntosh is under contract through June 2029.

“I don’t think there’s anyone in the building that thinks that where we are at this moment in time right now, this is what Wisconsin football is,” he said Saturday. “… I’ll come back to what I said earlier: What’s left to be done about that? What’s left to be done about that is to learn from what happened on a day like today and grow.”

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TCU, Dykes prevail in 104th and final Iron Skillet

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TCU, Dykes prevail in 104th and final Iron Skillet

FORT WORTH, Texas — After 104 meetings, the TCUSMU Iron Skillet rivalry is over, with the Horned Frogs claiming the final edition 35-24 on Saturday.

TCU coach Sonny Dykes, who has been on both sides of the rivalry as head coach at SMU before moving west to Fort Worth, has been vocal that he doesn’t think the series should continue.

“It’s college football, it’s business and people have to make business decisions,” he said. “Sometimes nobody likes ’em.”

Last season, SMU won 66-42, and Dykes was ejected from the game after getting two consecutive unsportsmanlike conduct penalties for arguing with referees. He said he has heard from plenty of SMU fans about why he didn’t want to play the Mustangs anymore.

Dykes won his last two games at SMU against the Frogs and Gary Patterson, then beat SMU his first two years at TCU in 2022 and 2023 before last year’s loss.

“I think the idea is that Coach Dykes is scared of the Iron Skillet game. Five outta the last six is what we won,” he said before referencing a 1970s power ballad by Meat Loaf, “Two Out of Three Ain’t Bad.”

“I think that’s a Meat Loaf song, right? Five outta six ain’t bad?” he asked. “So yeah, I ain’t too scared.”

TCU was led by quarterback Josh Hoover, who was 22-of-40 for 379 yards, five touchdowns and an interception, along with a breakout performance from wide receiver Eric McAlister, a Boise State transfer from Azle High School in the Dallas-Fort Worth area. McAlister had eight catches for 254 yards and three touchdowns. He lost another when SMU defensive back Jaelyn Davis-Robinson wrestled the ball away from him in the end zone for an interception, and he also had a catch in the end zone that was ruled incomplete. The game wasn’t stopped for a review, but Dykes said afterward that the officials on the field said they were powerless to ask for a review because the booth had already reviewed it and ruled it incomplete.

“I saw the video,” McAlister said afterward. “That was two feet down. That’s good in the league.”

McAlister said it was important to claim this last win over the Mustangs.

“We see those guys out on the streets every day no matter where it’s at. It’s Dallas, so it’s not that far,” he said. “They might never sign this contract again. So at least we’ve got bragging rights.”

TCU discovered the Iron Skillet was broken while it was in its possession in 2018, and sources said it was hastily replaced with a Lodge Cast Iron skillet from a hardware store shortly before the game. On Saturday, Dykes was asked, given the skillet has had some issues in the past, what he would do with it now that it was in TCU’s possession indefinitely.

“Probably get a sledgehammer and break it,” he joked. “I don’t know. Our players have it right now and they’re excited about it. We took a picture. Now we’ll probably cook something in it.”

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