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Job Growth Slows
Photo: Tom Denham
Trends in hiring and hourly wages indicate mixed news about the U.S. economy and the possibility of inflation. The U.S. Department of Labor report for May 2006 indicates that the economy is cooling. While unemployment fell from 4.7 percent in April to 4.6 in May, wages stalled and job growth has slowed.

Rising energy prices, lower auto sales, a softening housing market and less manufacturing during May means a loss of momentum for the U.S. economy. While 75,000 jobs were added by employers, this is the lowest number since last fall after several hurricanes devastated the Southern coast of the United States. After a 10-cent gain in April, hourly wages in May only rose one cent. The average hourly rate now stands at $16.62. However, the number of worked hours fell slightly during May.

Airlines, automakers, hotels, and retailers were among those eliminating jobs, with a flattened rate of hiring by the construction industry—a source of about 300,000 jobs each of the previous two years. The education, health care and business services sectors added some jobs.

Not all of it is bad news—the unemployment rate is the lowest it has been since 2001. Since the department began collecting data in 1973, the jobless rate among Hispanics and Latinos is at the all-time low of five percent.

It remains to be seen whether or not the Federal Reserve will raise short-term interest rates in an effort to dampen inflation. If this delicate balance cannot be achieved, the U.S. might experience a slow growth-high inflation economy similar to what took place during the 1970s. At this point, many different analysts believe that during the third quarter of 2006 the economy growth will be about 2.5 percent as compared to 5.3 percent registered during the first quarter.

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