The latest employment report is encouraging to many economists because the stronger job growth doesn't appear to be just a one-month blip. But some worry that it's so strong the Federal Reserve may pull back efforts to boost the economy.
The Labor Department's newest data released Friday shows the U.S. added 195,000 jobs in June. The prior two months were also revised upward — above 190,000 for both April and May.
That's three months of more-robust job growth.
"It looks like the labor market is quite a bit stronger than we initially assumed," says Paul Edelstein, director of Financial Economics at IHS Global Insight. "That's despite some of the headwinds that are coming from overseas and from the federal sequester, so it looks like the economy is just doing better than we thought."
That said, the mandatory federal cutbacks as a result of the sequester are costing the country at least some jobs. The gains announced Friday weren't enough to push down the unemployment rate, which remains at 7.6 percent.
John Challenger heads up Challenger Grey & Christmas, which helps laid-off workers find new jobs. His firm has been tracking some of the sequester-related cuts.
"Over 10,000 of those job cuts have been made so far this year, and they're coming from all areas of the economy — prisons, schools. We saw this month a uranium enrichment plant cut jobs because an Energy Department grant had been pulled back," Challenger says. The defense and aerospace industries are also feeling job cuts, he says.
Still, the job growth in the private sector now appears to be strong enough that some people worry that the Federal Reserve might start to pull back on its efforts to boost the economy. Fed officials recently signaled that they're considering a pullback or a "tapering" of that support if the economy continues to improve. And markets have been nervous because they're uncertain as to when the Fed might act.
"Easy monetary policy has been a major plus for the economy over the past nine months or so," Edelstein says. "I'm concerned that they may have stumbled more recently by talking about tapering because then markets don't believe that the Fed is committed to these policies, and they'll be less effective."
For example, mortgage interest rates rose after the Fed began talking about this. If rates kept rising a lot, that might slow the housing recovery.
But other experts disagree.
The Two-Way
Better Than Expected Job Growth In June