Welcome to the good-news-could-be-bad-news economy.
Friday’s Labor Department report showing a better-than-expected gain of 195,000 jobs in June was a heartening sign for many that the economic recovery continues to move ahead at a modest pace. But it could ultimately turn out to be bad news, especially for Democrats, because it means that the Federal Reserve might start winding down its extraordinary efforts to boost the economy later this year.
And if the Fed takes the juice away too soon it could tank the stock market, crush housing prices, snuff out the four-year-old economic recovery, and make life exceedingly difficult for any Democrat who hopes to run in 2016 for what will essentially be President Barack Obama’s third-term.
“This jobs report is a data-point that will get people wondering if the Fed will really start pulling back as soon as September, as many people are expecting,” said Nigel Gault co-chief economist at the Parthenon Group. “And it certainly raises the stakes for the next for the next three jobs reports.”