Unemployment rate drops to 8.8%
A higher than expected rise in US payrolls in March kept stock markets humming yesterday and helped push the country's unemployment rate down to 8.8 percent, its lowest point in two years.
In fact, the unemployment rate has fallen one full percentage point since November.
The encouraging news from the Labor Department sent blue chip stocks to a nearly three-year high, but it also pushed oil prices above the $108 a barrel level, highest since 2008, before crude settled yesterday at $107.94. This nearly ensured a continued spike in gas pump prices.
"It provides more evidence that the economy is gaining a self-sustaining momentum, but it also says we still have a long way to go," said economist Julia Coronado at BNP Paribas.
The report also underscored that incomes have actually declined in the first quarter, evoking stronger fears that consumers can't support a recovery due to rising gasoline and food costs.
One economist called the conflicting data "a fly in the ointment" for a full recovery. "Income rose 4.2 percent for the quarter -- a solid pace -- but inflation is projected to rise about 4.9 percent on higher gasoline prices," said Jay Feldman, economics director at Credit Suisse Securities. "That isn't the stuff of strong consumption gains."