How the June Jobs Report Matters for the Fed

The employment report for June, to be released Friday, won't resolve considerable differences among market segments and economists concerning what lies ahead for the U.S. economy. The possibilities include a continued new normal of low and insufficiently inclusive growth, an improvement that pulls up both actual and potential growth rates, or the worrisome beckoning of recession in the midst of even more extreme inequality. But the report can provide comfort to the Federal Reserve, which is still inclined to hike rates and reduce the size of its balance sheet, despite the economy’s recent soft patch.

Employment creation has been the bright spot of the U.S. economy in recent years. About 17 million jobs have been added since the depth of the recession in 2009, helping to push the unemployment rate down to 4.3 percent, its lowest level in 16 years.