Mixed signals


The U.S. employment report for May showed an increase of 175,000 jobs during the month. It also showed a rise in the national unemployment rate, from 7.5 percent to 7.6 percent.

The increase in the jobless rate is attributed to new entries and re-entries in the work force. That actually would be a positive sign, reflecting hope by these prospective workers that they will find jobs in a strengthening economy.

The May job creation total is slightly above what is required to absorb normal monthly entries into the labor market. President Obama’s administration claimed the May figures are part of an overall recovery of the economy from the recession that started in 2007, noting that the nation has added 6.9 million jobs over the past 39 months.

It is probably true that America’s economic climate is brightening. The stock market has risen, keeping America’s 1 percent smiling. Automakers, led by Ford and Chrysler, sold 1.44 million new cars and trucks in May, up an encouraging 8.2 percent from the year-ago month.

At the same time, a dark cloud continues to hover, in the form of the Federal Reserve Bank’s practice of “quantitative easing.” Since last September, the Fed has printed $85 billion in new money every month and used it to buy bonds and other facilities from private banks. The banks are supposed to lend that money to stimulate the economy.

This process is inflationary, but inflation has stayed low. So the banks are either sitting on that money, speculating with it — perhaps in the rising stock market — or sending it overseas. The latter interpretation would be supported by the $40.3 billion rise in America’s trade deficit — 8.5 percent — from March to April. That money must be borrowed from China, Japan, Europe, or Arab nations.

Americans should like May’s job figures. But they should not imagine that the country’s economic woes are near their end.