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June Jobs Report Eases Fed Fears

Aired July 7, 2000 - 1:01 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: Main Street is happy. Wall Street is happy. But what does Alan Greenspan think? Newly released figures show unemployment fell a tenth of a point last month to an even four percent. At the same time, the increase in jobs was slight enough to suggest that economic growth may be under control. But does that mean that Greenspan and the Federal Reserve are through raising interest rates?

CNN's Bob Beard looks into that question.

(BEGIN VIDEOTAPE)

BOB BEARD, CNN CORRESPONDENT (voice-over): The booming U.S. economy added just 11,000 new jobs in June. The smallest overall gain since a blizzard shutdown much of East Coast in January 1996. Still there's a bug in the numbers. June's apparent weakness in hiring was mainly because 190,000 temporary census counters finished their jobs and were laid off by the government. Private employment blossomed in June by over 200,000 jobs with hiring gains in business services, recreation and retail.

ALEXIS HERMAN, LABOR SECRETARY: I think it tells us that this economy continues to perform at a very solid and steady pace. And I think it further indicates that this economy probably did take a breather last month.

BEARD: But some economists point out four percent unemployment may be too low for the comfort of Alan Greenspan and the inflation- wary Federal Reserve. The central bank has raised interest rates six times in a year, and has signaled it may do it again in late August.

JOSEPH LAVORGNA, DEUTSCHE BANK: The economy is still very strong, you've hit maybe a little bit of a soft patch in the second quarter. But as we go forward, growth is likely to remain strong. So it's very good news for Main Street. However, for the Fed, I still think they're going to be worried, the rate at 4.0 is still problematic.

BEARD: U.S. workers also enjoyed a little extra in their June paychecks, average hourly earnings, a key gauge of inflation, gained a nickel to $13.71 an hour.

(on camera): Despite those gains, economists note wage inflation remains pretty tame. Wages up just 3 1/2 percent from a year ago. Bob Beard, CNN Financial News, Washington.

(END VIDEOTAPE)

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