Just how strong is the U.S. economy?
It’s a central debate in the presidential election and on Wall Street. President Obama is trying to take a “victory lap” for the economic rebound, while Republican presidential candidate Donald Trump describes the economy as terrible.
The U.S. Labor Department will release the latest look at how many Americans are employed at 8:30am E.T. on Friday. It’s a closely-watched indicator.
The key factor is how many jobs were added in April. The U.S. has been on a hiring surge for the past two years, regularly adding over 200,000 new jobs a month. Falling below that could indicate an economy that’s stumbling.
Here’s what to watch for:
1. 197,000 jobs added in April — CNNMoney’s survey of economists predicts 197,000 jobs were added in April. Anything below 200,000 would be a bit of a disappointment.
2. Unemployment stays at 5% — CNNMoney’s survey predicts the unemployment rate will stay at 5% even though more people got jobs in April. Why? Lots of people are finding jobs, but the number of people looking for jobs has also gone up. That’s actually a good sign for the economy. It means more people are optimistic they can get jobs so they are searching again.
3. Is wage growth better than 2.3%? — One of the biggest letdowns in the recovery is that wages haven’t been rising very fast. Typically, wages grow about 3% to 3.5% a year when the economy is healthy, but wages have only been rising at a tepid 2.3%. Anything higher is a good sign.
4. A stock market bounce — If the jobs report is much better than 200,000 jobs added in April, it’s possible the market will bounce because it’s a strong economic signal. It’s also possible the market will rally if the jobs figure is really low. That’s because investors are concerned about whether the Federal Reserve will raise interest rates at its next meeting in June. A weak April jobs report will make it harder for the Fed to justify a June hike. Thus the stock market may go up, even if the jobs news is ho-hum.
5. Trump seizing on ‘disappointing’ data — A weak April report could play right into Trump’s portrayal of a “loser economy.” Trump also likes to hammer America’s manufacturing job losses. The U.S. has shed 185,000 energy and mining jobs in the past year and a half because of cheap oil. Manufacturing jobs have also been disappearing because the strong dollar makes U.S. products more expensive on the global market.