The good news from the US Dept. of Labor came on Friday with 390,000 non farm labor jobs setting a 17th month straight streak of job gains, giving a 96 percent gain towards the job losses from the Covid pandemic giving a huge relief to economists, the White House and Main Street, it also, just added more people back to work to give some confidence in the labor force participation number, one that is closely watched in this hot job market, and might, if continued, cool things down a bit and avoid an increase in inflation, and the dreaded specter of a recession.
While the numbers slowed a bit from last month, the consistent gains, over that period do show the US economy is humming along, and the slowdown is welcome, and with the dial moving upward for labor force participation, the Fed is also keeping a close eye on the number, as we have noted before, to set any needed actions and consist of hikes in the interest rate, actions that have to be carefully calibrated, since too much is just as bad as too little.
The banner rate of unemployment expected to be reduced by 3.5 remained at 3.6 percent, but as we’ve outlined previously, consumer behavior, after the lockdown has seen a swift transition to services rather than goods, and nowhere has this been seen most is in leisure and hospitality which shot up to a whopping 840,000, with 21,000 of that figure in hotels and resorts as Americans who have received the vaccine jab, are jetting away to see families, friends and resorts for a holiday.
While the pandemic is not over, many people feel that it is, and the psychological pull, coupled with more cash in their checking accounts, since 2019 has prodded them to think that the worse may yet be over; and, while virologists and, biologists try to counter this optimism, the cash registers are ringing.
An added impetus are higher wages as employers continue to try and fill slots with qualified people, something they have complained about for months, and offering higher wages and bonuses, has also caused some anxiety among Fed officials who feel that a hot job market coupled with even higher salaries has to be tempered lest inflation become runaway.
Wages are indeed up, and as The New York Times reported, “Economists are also closely watching wage growth, which many say needs to slow in order to bring inflation under control. Average hourly earnings rose 0.3 percent in May, and are up 5.2 percent over the past year. The pace of wage growth has slowed a bit in recent months, although it remains simultaneously slower than inflation and faster than many economists consider sustainable.”
Federal Reserve Chair Jerome Powell noted last month, ““Everyone loves to see wages go up and it’s a great thing, but you want them to go up at a sustainable level,” and furthermore, “These wages are, to some extent, being eaten up by inflation.”
If this feels unfamiliar, or even undesirable, the past is past and the White House has taken an optimistic tone: ““Where we are going to is a period of more stable growth, more resilient growth, that should look different than that historically fast recovery,” Brian Deese, a top economic adviser to Mr. Biden, said in an interview. The administration’s goal, he added, is a more sustainable recovery “that generates more economic opportunities and more economic security for middle-class families than the prepandemic economy did.”
Labor participation came in at “62.3 percent last month, the Labor Department reported — an increase from 62.2 percent in April, but still well beneath its prepandemic level of 63.4 percent,” but also gave push to prime age workers, those from 25 to 54, at 62.2 but still hovering below the prepandemic benchmark of 63.4 percent, they added.
For Blacks, in May, the participation rate grew to 63 percent, but this has pros and cons for job seekers, since as the workforce increases, employers can pay what the market bears and not exceed the budget to lure workers from the sidelines; but, this is a double edged act, and as an old adage in the Black community commonly goes, “the last to be hired the first to be fired.”
For Black women over the age of 20 their employment rose to 5.9 percent, and 4.7 for Hispanic women giving some increased hope despite the timeout on the child tax credit that gave between $150 and $300 to older and younger children.
While the increase was welcome, for white women the unemployment was one half of that at 0.1 percent and “These inequities absolutely existed before the pandemic,” said Elise Gould, a senior economist at the Economic Policy Institute to CNBC.com, and added,. “When we talk about returning to prepandemic levels, sure, we’re getting pretty close to that, but that just bakes in the disparities we had in the prepandemic labor market, and that’s just not good enough.”
“This growth and recovery is not reaching everyone, and it’s not going to reach everyone unless we improve our systems and policies to address those gaps and support these workers,” said Kathryn Zickuhr, a labor market policy analyst at the Washington Center for Equitable Growth. “Really, the time to do that is now because we are in this period of recovery. When things are going is when it’s time to plan for the next period of upheaval.”
No comments:
Post a Comment