US payrolls rose more than expected in May. The economy added 139,000 jobs last month, the Labor Department reported. “Stronger than expected jobs growth and stable unemployment underlines the resilience of the US labor market in the face of recent shocks,” said Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management.
● How Countries Go Broke: The Big Cycle
Ray Dalio
Review via Inc.
Billionaire investor Ray Dalio, who founded Bridgewater Associates, the largest hedge fund in the world, is warning that the debt situation in the United States is approaching a “death spiral” that could eventually threaten the entire U.S. economy.
In his new book, How Countries Go Broke: The Big Cycle, Dalio joins a growing chorus of financial experts and billionaires who have been sounding the alarm about government debt levels. The book comes as a report from the Congressional Budget Office released Wednesday found that Donald Trump’s budget bill would add $2.4 trillion to national debt, which currently stands at $36.9 trillion. The problem, Dalio said, is “urgent.”
Uncertainty and risk continue to weigh on the outlook for the economy, but the latest nowcasts for the government’s second-quarter GDP report (due on July 30) are still pointing to recovery after Q1’s slight contraction.
US jobless claims rose last week to the highest level since October, raising a possible warning flag for the labor market outlook. “Jobless claims continue to rise, but they are rising at a slow pace, so it’s a trend worth watching, but too soon to sound the alarm,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
May is shaping up to as challenging month for reading the macro tea leaves in an effort to gauge how tariffs are affecting the US economy. Tomorrow’s payrolls report from the Labor Department may provide clarity. Meanwhile, the early profile for last month is a study in contrasts.
US services sector unexpectedly contracted slightly in May, according to survey data via ISM Services Index. The index dropped to 49.4 last month, just below the neutral 50 mark, easing to the lowest level since June 2024. Another survey of the services sector paints a brighter profile: the S&P Global US Services PMI posted a firmer pace of moderate growth last month. “That said, the improvements come from a low base, following a very gloomy April, which saw growth nearly stall as confidence sank to a two-and-half year low,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The US stock market has recovered most of its recent losses, and the rebound has left momentum strategies far ahead in the performance horse race for equity factor results this year, based on a set of ETFs through yesterday’s close (June 3).
US job openings rose in April, highlighting resilience in the labor market. Despite uncertainty related to the trade war, the Labor Department reported that employers posted 7.4 million job vacancies in April, up from 7.2 million in March. “Once companies are more certain that bad times are coming, they will start to shed workers,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a commentary. “However, the economy is still near full employment. We suspect companies are still hoarding workers until they are very, very sure about an economic downturn.″
The long-run expected total return for the Global Market Index (GMI) ticked higher again in May, edging up to an annualized 7.2% from the 7.0% estimate in the previous month. Today’s estimate is slightly below GMI’s realized 10-year performance. The forecast is calculated as the average of three models (defined below) for GMI, an unmanaged global benchmark that’s based on a market-value weighted mix of the major asset classes (excluding cash).
US manufacturing contracted for a third straight month in May, based on survey data. The ISM Manufacturing Index edged lower last month to a six-month low of 48.5, moderately below the neutral 50 mark that separates growth from contraction. “The outlook for the manufacturing sector looks downbeat, particularly with the initial surge in demand from front-loading now behind us,” said Matthew Martin, senior economist at Oxford Economics. “Businesses are contending with higher input costs, supply disruptions, and domestic and foreign customers wary of committing to new orders.”
