The number of new jobs created in May declined to a steady 248,000, according to the Department of Labor. The unemployment rate remained unchanged at 5.6 percent. This data reinforces the past two months' data and shows that the labor market continues to tread water - much higher jobs numbers will be necessary to bring the unemployment rate down.

The number of new jobs created in May declined to a steady 248,000, according to the Department of Labor. The unemployment rate remained unchanged at 5.6 percent. This data reinforces the past two months' data and shows that the labor market continues to tread water - much higher jobs numbers will be necessary to bring the unemployment rate down.

However, recent developments in oil and gas prices are threatening the status quo. The price of oil has periodically broken the $40 dollar a barrel mark over the past several weeks. With consumers sending more money overseas to pay for oil, there will be less money for other domestic spending.

According to a recent Gallup poll, about half of those surveyed said recent gas price increases have caused them financial hardship and about one-third said they have reduced other spending significantly.

Importantly, and as one might expect, the number of people cutting back is dependent upon income levels -- while only 15 percent of those making $75,000 or more reported having to cut back, a much larger 55 percent of people earning less than $30,000 a year reported having to cut back on spending.

Oil prices will have less of an impact than they did 25 years ago, because oil now represents a smaller fraction of the U.S. economy. However, there is still likely to be an impact on spending and the economy as a whole.

Reductions in consumer spending on non-gas related items will cause the economy to slow and eventually harm job growth. Just how much, and when the impact will be felt, remains to be seen.

As a side note: an illustrative (but not rigorous) analysis of the relation between change in oil prices and economic performance from 1960 to 2000 shows how changes in oil prices might impact the economy. According to the data, on average, a 10 percent increase in the price of oil precedes about one-half of a percentage point reduction in real GDP. So, an increase in the price of oil from $30 a barrel to $40 a barrel, we might expect real GDP growth to be lower by about a percent and a half. See graph below.