The likelihood is that the May data will show that the economy is still able to create jobs and keep unemployment low, despite other late-cycle characteristics. Wages will likely edge up as part of a multimonth trend. But moving the labor participation rate to higher levels will remain challenging. And the longer this is left unaddressed by the public and private sectors, the greater the headwinds to the inclusive medium-term prosperity that the U.S. economy is able to deliver.
Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, and he was chief executive and co-chief investment officer of Pimco.
This column was provided by Bloomberg News.