CNN: "Does the Fed have the labor market all wrong?" The labor market just won't quit, but this could be another case of "good news is bad news" for the Federal Reserve. The US unemployment rate has been at or below 4% for the past year and a half, and the economy has gained an average of 314,000 jobs each month this year through May. People who need jobs are getting them, and those with jobs are getting paid more. Business and consumer sentiment remain resilient and spending and investment are also proving to be relatively robust. Gross domestic product, the broadest measure of economic output, grew by 2% in the first quarter. But while job growth is a sign of a healthy economy, Fed Chair Jerome Powell has said that he wants to see more slack in the labor market in order to bring inflation down. If there are too few people chasing too many jobs, he says, wages will rise and add to upward pressure on prices. What's happening: This week, a slew of new unemployment data is expected to show that US hiring finally slowed in June. Economists forecast that the US added 223,000 jobs last month, way down from the 339,000 added in May. But here's the thing: those forecasts have been way off. They projected sharp drops in hiring for April and May; instead there was increased employment. And so in order to get unemployment back to where it thinks it should be (5%), the Fed keeps pushing interest rates higher. Source: CNN Business