MUNCIE, Ind. - Movement of the nation's jobless rate below the 4 percent threshold is an important symbolic milestone for an economic expansion, says a Ball State University economist.

A recent report by the U.S. Bureau of Labor Statistics revealed the nation's unemployment rate fell to 3.9 percent in April, but it also reported strong hiring by businesses across a wide spectrum of industries, said Patrick Barkey, director of the Ball State Bureau of Business Research.

The federal bureau reported payroll employment at business establishments was up by a robust 340,000 jobs in April, continuing a strong hiring trend that began last fall. For six out of the past seven months, the U.S. economy has added at least a quarter million new jobs, bringing the job total nationwide to 131.1 million -- almost 3 million more jobs than at this same time last year.

"The underlying message in these announcements is not lost on those trying to guess the direction of Federal Reserve policy in the weeks ahead," Barkey said. "Strong hiring by businesses will put more money in consumers' pockets, giving them the capacity to extend their national buying binge for at least a little while longer.

"And the continued fall of the national jobless rate makes it harder for employers to hold labor costs in check," he said. "It all adds up to a scenario that is ripe for the kinds of economy-wide price increases that the Fed fervently wants to head off."

Barkey believes other scenarios are possible as well. The rate of increase in consumer spending, which swelled to an 8.3 percent annual rate during the year's first three months, may be winding down on its own.

"Whether in reaction to declines in the stock market, or perhaps out of concern for their mounting debt, there are a few signs of hesitancy on the part of consumers that are beginning to emerge," he said.

The latest personal income report from the Bureau of Economic Analysis showed that savings rates edged upward even as income gains continued to be strong. The rates are still abysmally low -- just 0.4 cents per every dollar earned was saved in March -- but it is a move toward respectability, Barkey said.

There was also a mild decline in retail sales in April of 0.2 percent, according to the advance report released by the Bureau of the Census. The dip was led by a downturn in sales of automotive dealers, which helped sales of all consumer durables fall by 0.6 percent for the month.

"But this picture of a naturally slowing economy is too subtle for most analysts to see," Barkey said. "It is hard to find anything but upward momentum in an economy that has added more than a million jobs in the past four months."

By Marc Ransford, Communications Manager

(NOTE TO EDITORS: For more information, contact Barkey by e-mail at pbarkey@bsu.edu or by phone at (765) 285-5926.)