On the April Jobs Report

A payroll beat at 253,000 thousand, the lowest unemployment rate in almost 70 years and the fastest hourly earnings growth in 25 months – it puts pressure on Powell to follow through on the all-but-declared ending to this hiking cycle. At Wednesday’s FOMC Powell told the lie that he never said there was a causal connection between labor market strength and inflation. He has in fact said just that many times. There are second-order signs in today’s report that Powell could invoke to find some weakness. But his lie is constructive, because there is indeed no such connection. As inflation continues to fall, accepting the truth is now is the key to fulfillment of the market’s expectations that rate cuts will begin in the second half of this year.