Implications:  The US labor market got stronger across the board in May.  Nonfarm payrolls rose 223,000 for the month, beating the consensus expected 190,000.  Meanwhile, civilian employment, an alternative measure of jobs that includes small business start-ups, rose 293,000.  In the past year, nonfarm payrolls are up 197,000 per month while civilian employment is up 191,000, both signaling a robust trend in job creation.  As a result of continued strength in jobs, the unemployment rate dropped to 3.8% in May, tying the lowest level since 1969.  By the end of 2019, we project the jobless rate will be 3.2%, which would be the lowest since 1953.  It's now possible that, by 2020, the jobless rate will fall below 3%.  Yes, the participation rate slipped to 62.7% in May, but the participation rate has been hovering between 62.3% and 63.1% since late 2013, so the report for May is right smack in the middle of the recent trend, with cyclical strength in the labor market offsetting the downward pressure on participation from the aging of the Baby Boom generation.  Perhaps the best news in today's report was a 0.3% increase in average hourly wages, which are now up 2.7% from a year ago.  Total hours worked rose 0.2% in May and are up 2.1% from a year ago.  As a result, total earnings - which combine the total number of hours worked and average hourly earnings - are up a respectable 4.9% in the past year, more than enough to keep pushing consumers' purchasing power higher.  Moreover, this gain doesn't include extra earnings from irregular bonuses and commissions, like those paid out after the tax cut was passed.  Back in March, the Federal Reserve projected the jobless rate would average 3.8% in the last quarter of this year.  Now that the jobless rate is already 3.8% and down half a percentage point from a year ago, we think a number like 3.6% is more likely and 3.5% is a reasonable guess, as well.  As a result, look for the Fed's forecast for the unemployment rate to drop when the new set of projections is released on June 13, along with upward projections for both real GDP growth and inflation.  This is why we're still confident the Fed will raise rates a total of four times this year even though the futures market in federal funds puts the odds of four rate hikes or more at about 45%.

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