If there is too much of a good thing,then the September Jobs Report released by the US Labor Dept on Friday, then that news of 263,000 nonfarm payrolls gave the Federal Reserve enough of the jitters to wonder how much more that can be done to lessen the hiring, and by turn, the still high wages that desperate employers are using to lure the best talent that is needed to attract them, and enough to frustrate the Feds as they struggle to meet their twinned mandate of full employment and 2 percent inflation.
There is so much resilience in the American economy, and that has recovered nearly all of the jobs lost to the Covid pandemic, yet there are still employers that need workers, even after lessening educational requirements, forgiving prior marijuana convictions, but still the need for more employers.
Women are still underrepresented and child care workers are one group that have lost employees, and the consequence is that many women are staying at home to take care of their children. Labor Force participation, overall, has stayed relatively the same, and 62.3 percent, a notch higher than in August.
While some have definitely decided to reevaluate their skill set and move away from prior jobs, but for many men, largely unaffected by child care are holding back, a conundrum for the Reserve, who is expected as The New York TImes stated, another “jumbo sized” rate increase, with bets of another 0.75 percent. And, while time will tell, the economy is like a watched pot that never boils.
The unemployment rate has inched down to 3.7 percent from 3.5 making it robust and also resilient, which equals a fifty year low; but, the elephant in the room is still inflation that has nibbled away at wage increases, as the public struggles to deal with high rents, and food prices, some even seeing double dollar increases on such prosaic groceries, such a doughnuts, not to mention the more protein based options such as meat.
Those wages up by 5 percent on an annual basis, and monthly by 0.3 percent, are not keeping up with inflation is a huge problem for consumers even as they have moved away from consumer products to services.
Fed governor Phillip T. Jeffries told the Times that he felt that “upward wage pressures in the future” can be problematic. But, some areas have faced challenges, and transitions, for example from the traditional nursing home, to aging in place with home health care aids, an area that has surged.
Some see that a recession is inevitable, or are we inevitably, say some, conjoined with European central banks that say the same things, or are we on rosier shores in the US, or are we simply rearranging deck chairs on the Titanic?
Of course, the Fed moves, calibrated as they need to be, will lead to less jobs, especially for those wage earners at the low end.
“Mohamed El-Erian, Allianz’s chief economic adviser, said on Sunday that the U.S. is heading toward a recession that was “totally avoidable” amid ongoing concerns about inflation and economic stability, reported The Hill on Sunday, and also said that there was simple mismanagement by the Fed.
“One is mischaracterizing inflation as transitory. By that, they meant it is temporary, it’s reversible, don’t worry about it. That was mistake number one. And then mistake number two, when they finally recognized that inflation was persistent and high. They didn’t act. They didn’t act in a meaningful way,”
Taking a closer look at some significant changes that Inflation has done has led to a lessening in an area that many had thought steady, leisure and hospitality, whether it's hotel room service, or restaurant servers.
Retail is also seeing a downward path with major retailers such as Walmart saying that they will cut their holiday hiring, while the online retail giant, Amazon says it will not.
A gamble, maybe, or is caution, the watchword?
Meanwhile the tone from the White House is optimistic as President Biden said to workers at a Hagerstown, Md. Volvo plant, “Our job market continues to show resilience as we navigate through this economic transition, the pace of job growth is cooling while still powering our recovery forward.”
With the November midterms nipping at his heels Biden has tried to sell the middle course as a path to recovery, while his Republican opponents want to tag him, and him alone, with failure to address inflation, which is really the province of the Federal Reserve, but with swords drawn for a fight, truth doesn't matter, but votes do.
Many economists don’t necessarily believe in this cooling as having much effect, but it plays well in Peoria, as the old comedians used to say.
No comments:
Post a Comment