November Jobs Report is shaken, but not stirred

Continuing the slowdown for the American job market the Labor Department released November employment figures on Tuesday consistent with what we have seen for the last several months: the US took a loss of 106,000 jobs, and a gain of only 64,000 jobs with an unemployment figure of 4.6 percent the largest seen in four years; but, due to the government shutdown it does not contain the usual snapshot, and some economists see the figures as shaky with the lack of not only the snapshot, but also the data collection from the household survey, methods lacking the necessary detail due to shutdown delays.

Methodology is at the forefront of blow-back from the White House touting the success of the American economy and the increased proliferation of native born workers, an assertion consistent with the Trump administration's goals of immigrant removal both legal, and illegal.

CNN reported that “The White House on Tuesday touted the latest employment figures as a sign of a “strong, American First economy,” highlighting gains in the private sector:

“Since President (Donald) Trump took office, 100% of the job growth has come in the private sector and among native-born Americans — exactly where it should be,” White House press secretary Karoline Leavitt wrote Tuesday.” 

“Private-sector businesses have indeed driven job growth this year while public sector employment has declined – entirely because of steep federal workforce cuts by the Trump administration. From January through November, the US economy added 499,000 jobs: The private sector added 687,000 jobs and the government (federal, state and local) shed 188,000 jobs.”

With the midterm elections upcoming in a matter of months the administration is determined to show that there are job gains for the US, but as CNN added, “However, the pace of job growth has fallen off: The year-to-date employment gains – overall and private-sector – are the weakest since 2020 and, before that, the Great Recession.

Additionally, it’s impossible to attribute the monthly employment gains reported widely from the jobs report to any particular nativity or documentation status – labor force and demographic statistics are drawn from an entirely different survey than the monthly payroll numbers."

While some economists and observers see this as a shell game by the White House, it’s a sure bet with high stakes at maintaining a lead in the US House of Representatives they will want to put a best foot forward on what is a slowly leaking jobs market.

While the DOGE decimation of federal payrolls gave a strong hit to the report, combined with more workers holding part-time jobs because they could not find full-time work increased to 8.7%, its highest since August 2021, a concerning fact.

According to CNBC, “The October slump came from a steep fall in government employment as deferred layoffs instituted earlier this year took effect. Government payrolls were off 162,000 for the month, and fell an additional 6,000 in November."

Once again, the heavy hitters were health care, adding 46,000 jobs, with more than 70% of the total net increase, and construction added 28,000, while the umbrella label of social assistance showed 18,000.

It was also reported, “On the down side, transportation and warehousing was off 18,000, part of a continuing trend in job losses for the sector. Leisure and hospitality also posted a loss of 12,000.”

A significant reason for the steady and reliable hiring increases in health care are America’s aging population, and their reliable needs.

While hiring has slowed and in some cases been eliminated, the Trump White House paints a glowing picture: “The strong jobs report shows how President Trump is fixing the damage caused by Joe Biden and creating a strong, America First economy in record time,” Leavitt said in a statement adding that “Workers’ wages are rising, prices are falling, trillions of dollars in investments are pouring into our country, and the American economy is primed to boom in 2026.”

The Federal Reserve in creating a rate cut had a difficult path to follow and

the dilemma that Powell has faced, as we have noted many times before, is the balancing act between meeting the mandate of full employment with 2 percent inflation.

Inflation has rebounded from earlier years when it was over 3 percent, especially in the post pandemic world, the current rate is still high; and, is especially felt by low income Americans during their weekly grocery shopping;with many feeling that the president has not kept his campaign promise of lowering those prices, inasmuch as any president can.

“The Fed is unlikely to put much weight on today’s report given data disruptions,” said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management. To CNBC, noting that,“The report on December’s employment data, released in early January ahead of the next meeting, will likely be a much more meaningful indicator for the Fed when it comes to deciding the near-term policy trajectory.”

Thursday offered a glimmer of hope with the CPI report that strips out volatile food and energy costs, and according to Yahoo Finance,“Inflation pressures eased more than expected in November, according to the latest data on consumer prices published by the Bureau of Labor Statistics.”

The Consumer Price Index (CPI) rose 2.7% over the prior year in November, less than the 3.1% increase that had been expected by economists, according to Bloomberg estimates.”

However, there is a cautionary note, “This looks like positive news overall, but the lack of detail and the absence of data collection during the shutdown introduce a degree of skepticism that’s hard to ignore," wrote Olu Sonola, head of US economic research at Fitch Ratings, in an email after the report,” but added that “Tariff pass through remains muted, even as companies stocked up on holiday imports facing higher duties. The Fed will welcome that trend, given its recent focus on cutting rates to support a softer labor market."

In his Wednesday night address to the nation, the president said, “Very importantly, there are more people working today than at any time in American history. And 100 percent of all jobs created since I took office have been in the private sector. Think of that, 100 percent of all jobs have been in the private sector rather than government, which is the only way to make a country powerful and great."

As was expected he trashed former President Biden and his handling of the economy, immigration and that the rest of the world laughed at us, and while we will leave the majority of fact checking to others, to say that Trump was on a stretch would not be an exaggeration.

“Already, I’ve secured a record-breaking $18 trillion of investment into the United States, which means jobs, wage increases, growth, factory openings and far greater national security. Much of this success has been accomplished by tariffs, my favorite word, tariffs, which for many decades have been used successfully by other countries against us, but not anymore.”

Tariffs have been the core of uncertainty by the nation’s employers and while the full effect may not be seen until January, this current fear can be seen in the November jobs report.

Taking a closer look,”Average hourly earnings rose just 0.1% for the month, below the estimate for 0.3%, and were up 3.5% from a year ago, the smallest annual gain since May 2021,” and "The 0.1 percentage point increase in the unemployment rate was largely a function of labor force growth.”

“The strong jobs report shows how President Trump is fixing the damage caused by Joe Biden and creating a strong, America First economy in record time,” Leavitt said in a statement, stating that, “Workers’ wages are rising, prices are falling, trillions of dollars in investments are pouring into our country, and the American economy is primed to boom in 2026.”

Steady consumer spending has been seen by high income earners, and while inflation has rebounded from earlier years when it was over 3 percent, especially in a post pandemic world, the current rate is still high, and is especially felt by low income Americans during their weekly grocery shopping; and, many are feeling that the president has not kept his campaign promise of lowering those prices, inasmuch as any president can.

A recent PBS/NPR/Marist poll showed Trump taking a direct hit by Americans who feel that he has failed them, with 55 percent of those polled disapproving of the way he is handling the economy.

August Jobs Report shows a cooling job market

The August Jobs Report released on Friday by the US ,Bureau of Labor and Statistics brought a certain measure of concern from both economists and laypeople alike, with 142.000 non farm jobs, after an expected 160,000, but while there was some wringing of hands, it was a fair assessment of what was expected after the immediate post pandemic figures of 939.000 jobs, a high that was bound to come down, and the unemployment rate was a modest 4.2 percent.

While some US employers may have hoarded workers to avoid layoffs and downward trends in profit, this reluctance did not translate into the doom and gloom some observers might have seen it as,but rather as Jeffry Roach, chief economist at LPL Financial noted to Reuters, “Businesses are still adding to payrolls,but not as indiscriminately.”

Certain key features of this report showed a level of stasis in both labor force participation, little changed from previously at 62.7, and 4.8 million people working part time for economic reasons.

Equally, there were 24,000 people that wanted a job, virtually unchanged from the July report.

All things considered this report showed solid growth, despite some concern about employment in some areas, but notable is that wages have kept up for most workers with inflation, as we also saw in July; but, this month average hourly earnings for all private non farm payrolls rose by “14 cents, or 0.4 percent, to $35.21. Over the past 12 months, average hourly earnings have increased by 3.8 percent”

There were some economists that showed a level of concern with the June revisions, a standard for these reports, due to reporting time; and June is now 118,000 jobs gained, and this, too, shows a stable pattern.

As Reuters reported, these revisions are not atypical and are representative of 10 of the last 13 years of job reports. But, some are seeing this as not only a cause for concern but signs of a recession, a durable position taken by some.

Areas that have peaked from this report are somewhat similar to earlier reports: Construction which has been a constant, reaching 34,000, and “higher than the average monthly gain of 19,000 over the prior 12 months,” health care at 31,000, but half than the average monthly gain of 60,000 from the previous 12 months.

Manufacturing, a cause of concern of the presidential candidates in the November election, edged down, says the report, but noted that, “manufacturing employment has shown little net change over the year,” and, social assistance continued its upward trend, over 13,000, “but at a slower pace than the average monthly gain over the past 12 months,” perhaps reflecting a greater investment in some communities.

What we didn't see was the usual back to school bump in education employment, but that might be due to the end of the collection period, and might be reflected in the September report.

Of course, no discussion of the monthly jobs report would be complete without the elephant in the room, inflation, and its effects on consumers, and their actions in the national economy.

While there has been a downward trend in inflation, 2.9 percent for August, and that rate has prompted Federal Reserve Chair Jerome Powell to say,that, “the time has come for policy to adjust,” at last month's meeting at Jackson Hole Wyoming; that said, much of the American public is focused on higher grocery prices, nearly obfuscating his anticipated actions in September to lower interest rates.

Predictions are for at least a 0.25 percent reduction

That aside, the main drivers of inflation, and its contributing factors tilt towards the costs of shelter, transportation and vehicle insurance, as the average person attempts to balance their monthly budgets. 

It’s a tight squeeze and the cooling, no matter how slight in the job market, and current interest rates, prices in some key areas will continue to rise, allowing for seasonal variations, as federal departments don’t seasonally adjust every consumer item, and experts advise that examining annual rates allow for a better picture; but, it’s also a good bet that most consumers are not going to look into, or take the time, to examine those detailed reports.

Inflation does have deleterious effects in many areas, but two key effects are in retirement savings, and savings accounts, but consumers do feel hamstrung between the higher prices of many common grocery items from frankfurters to instant coffee.

All in all, as Mark Hamrick, senior economist analyst at Bankrate, said to The Hill, “The August snapshot is consistent with other data pointing to a weakening job market, including a reduction in job openings pointing to relative balance between the supply and demand of labor.”

It also underscores the job that Powell and the Federal Reserve have done at balancing movements at calibrating between too much or too little action to preserve its traditional path at keeping inflation at 2 percent and the nation at full employment, a data driven task, but one that seems to have been met.

Strong gains continue with February Jobs Report

Once again the February Jobs Report released on Friday by the US Labor Dept. showed a strong, and dare we say it once more, resilient job market for the world’s largest economy, at 275,000 jobs created, close to the 200,000 number for private employers released on Thursday.

It’s no one’s guess when interest rates will decrease and Federal Reserve Chair, Jerome Powell, as we have noted previously, is data driven and will not recommend that the Bank cut interest rates based on a few months of strong numbers. At the next meeting on March 19 to 20, most investors expect rates to remain the same, but some are hoping in June for a decrease.

“We’re waiting to become more confident that inflation is moving sustainably to 2 percent,” Mr. Powell told Congressional lawmakers on Thursday. “When we do get that confidence, and we’re not far from it, it will be appropriate to dial back the level of restriction.”

The Chair also said,”The economy is growing at a healthy, sustainable, solid, strong pace,” Federal Reserve Chair Jerome Powell said during a Thursday hearing of the Senate Banking Committee.

“We’re doing the best of anybody. We’ve got the strongest growth and the lowest inflation of the advanced economies,” he added..

That of course, is praise, but it also sends a note that cutting rates at this juncture could prove disastrous in overheating an already hot economy, currently the rate is 5.50 percent, and even a cut to 5.25 percent would prove unwise.

This is also the third straight month of job gains above 200,000, and Americans can look in the rear view mirror and see those depressing figures of the Covid pandemic that resulted in so many layoffs.

There was a slight uptick in the unemployment rate from 3.7 to 3.9 percent, but with monthly fluctuations being normal, the overall picture is still rosy, made even rosier that unemployment is under 4 percent for the 25th consecutive month.

Average hourly earnings increased to 4.3 percent, “We’ve recently seen gains in real wages, and that’s encouraged people to re-enter the labor market, and that’s a good development for workers,” said Kory Kantenga, a senior economist at the job search website LinkedIn, to The New York Times, and “As wage growth slows, he said, the likelihood that more people will start looking for work falls.”

Significantly, the labor force participation rate, or LFP, for those of prime working age, 25 to 54 has increased to 83.5 showing that many workers who were on the sidelines, have returned, and some, with continuing inflation returned to work, even part time; but, this could be higher if the United States offered subsidized child care. That being said, more flexible work schedules, increased wages and benefits are retaining a core of employees.

The pool of workers also increased with the immigrants that have been allowed to work, and those preceding them, from countries other than Venezuela, peaking between 120,000 and 200,000. Should Congress pass a comprehensive immigration bill reforming what was passed in the middle 1980s, that number could increase, especially for the unskilled labor force.

Taking a more comprehensive look at the household survey, or known in economic jargon as the U6, those not working, compared to those who are, is at 7.3 percent, a closely watched figure by some, but is often overshadowed by the banner, or marquee employment rate, is frequently cited, by the media, as well as by government officials.

Who were the stars in this report? Education and Health at 85,000 followed by Leisure and Hospitality at 58,000, and then Government employment at 52,000, with the continued growth of Construction, that had decreased hiring in the past, but now reflects the11th straight month, coming in at a strong 23,000.

Anirban Basu, the chief economist for the Association of Builders and Contractors told Engineering News Record that this was despite the “high project financing costs” and “elevated construction service delivery costs and lingering recessionary fears.”

Despite some concerns among economists, most agree that this is a strong report, and bodes well for the economy despite public concerns that the economy is in trouble, but this is based, as we noted last month, on the high cost of housing, and food prices, but nevertheless it will be an issue in the November presidential election.

August US Jobs Report shows resiliency, despite inflation

The United States economy has, once again, proved its resiliency with the August Jobs Report that showed continued strength in the monthly report issued by the Labor Department that showed  a healthy 315,000 non-farm jobs exceeding predictions of 300,000, and while not the show stopping number from July, employment is on the rise and also with wages, and there was a slight uptick in the employment rate to 3.7 percent, but that is less worrisome than the still red-hot job market.

The good news is that the slowdown is what the Federal Reserve wants to cool down inflation, and those still high job numbers also come with higher wages, and those higher wages, even while nibbled from higher prices are causing the central bank worries on how to bring it all down, in a calibrated way, and not by the earlier miscalculations from the 1970s where two decades of robust inflation ruled, or rather ruined the day.

While some economists are concerned that this slowdown is what is needed, there are others that feel that last year’s predictions of a soft landing  for the nation’s economy are long gone.

The New York Times reported that, “The central bank is still all but certain to raise interest rates at its meeting this month, probably by at least half a percentage point and perhaps by three-quarters of a point. That decision may rest on what happened to consumer prices in August; that data is scheduled to be released on Sept. 13, a week before the Fed’s meeting.

Fed Chair, Jerome Powell, whos has been on the hot seat for some months is someone who is data driven, and it will take some more data for he, and the regional governors to make a final consensus, and vote, on the size of the increase; but, there are many who are predicting another huge increase, perhaps as much as 0.75 percent, but all bets are on the table.

Politically, the news couldn't have come at a better time for President Joe Biden whose ratings are still tanked, and with the midterms around the corner, and he had this to say:

“Jobs are up, wages are up, people are back to work. And we’re seeing some signs that inflation may be — may be, I’m not over promising — may be beginning to ease,” Mr. Biden said at the White House. Coupled with falling gas prices, he said, “America has some really good news going into Labor Day weekend.”

While American employers, for some time, have complained about not finding the right type of worker with the right qualifications, and many are still saying it, others have noticed an increase in more qualified people returning to work, and that very well maybe as the TImes noted, a reflection of inflationary process as many people try to walk the financial tightrope, especially with high rents, and especially in large urban areas as New York, Los Angeles and Chicago.

“And headlines about layoffs and a possible recession may be spurring some people to return to work while they can. A recent survey conducted by the career site ZipRecruiter found that job seekers were feeling less confident about their searches, and were putting more importance on job security than on flexibility.

In fact, labor force participation (LFP) did show an increase of 0.3 percentage point, at an overall 62.4 overall percentage.

“People are spending down that pandemic nest egg a little more quickly than they expected because of rising prices, and now feel a bit more nervous and a bit more desperate to find a job,” said Julia Pollak, the chief economist at ZipRecruiter.

Desperation may be facing American Blacks as they face dim prospects for greater employment, and this report gives them a 6.9 unemployment rate, nearly double that of whites, (but steady across the board over several months) making cuts into wealth building, not only to just meet basic needs.

Often times flourishing in the service sector, these are some of the jobs that drew them into great demand, and with some employers waving aside less previously held requirements such as a high school diploma, or misdemeanors, or even weak performance and job histories, these are the same areas that could be cut as the Fed works to calibrate ways to cool down, what is still a red hot jobs market.

That, as former Treasury secretary Larry Summers noted last year in an analysis, could result in double digit unemployment for Blacks, historically seen unemployment seen across the decades and eroding the wage increases they gained over the last few months.

Rising wages have become, despite inflation’s deleterious effect on them, a concern for Powell and this slowdown in employment which may increase by year’s end also has can help, but is a double edged sword for many, especially in the service sector, and with two  jobs available for every job seeker, the elevation in wages to 5.2 percent is being watched as a barometer for anti-inflation measures.

Coupled with supply chain issues and commodity pressures has increased the pressure for Powell to determine how to juggle all of the balls to fight inflation in the coming months.

That aside, many are quitting jobs to attain those higher wages, for those that need qualified employees, especially in the private sector, and as The Hill reported, “Job seekers on Indeed.com are looking for ever-higher wages, Ann Elizabeth Konkel, an economist at Indeed Hiring Lab, explained. The number of Indeed users seeking jobs with a $20 per hour wage rose above those seeking $15 per hour in June 2022, and the number of jobseekers looking for $25 per hour is up 122 percent over the past 12 months.”

Coming out on top for August were retail, 44,000, manufacturing, 22,000, and business services, 68,000, and healthcare with 48,000 - although still reduced from burn out by staff caring for COVID-19 patients. And, while these areas are expected to grow, they are also vulnerable to downturns, as predicted, by later Fed actions..

For now, just now, this is the time for those looking to gain, or change employment to do so now, to lock in either a better wage, or better working conditions. As the old adage says: “Strike while the iron is hot.”

June Jobs Report shows US economy still strong

 June’s Jobs report, from the US Labor Dept, showed a surprise jump in non farm jobs and gave economists  a smile over their morning coffee this Friday since they had expected only 278,000; so, the news of 372,000 was an even better bonus, better than a chocolate croissant on their plates.

Another boon was for those that were the prophets of doom, sounding the alarm for a pending recession, and were proved wrong, since you can’t get a recession with numbers this high; and, the fact that these numbers also came in with rising inflation was another unexpected bonus.

Despite all of the hand wringing in some markets, it’s also clear that the US economy is resilient, even in the face of interest rate increases by the Federal Reserve to tamp down inflation.

The good news gets better with an approximate gain of 380,000 job gain, on average, over the past quarter, well above pre pandemic levels, even if slower than the prior year, and even better, has replaced nearly all of the near 21 million jobs lost in the private sector that began in February 2020, with few exceptions.

Who gained? For the last few months it was leisure and hospitality, that also takes in hotels and bars, had topped the list, but this time it was professional and business services that led at 74,000, and the former at 67,000 jobs still nothing to sneeze at despite a second place showing. But, of note it still is 1.3 million down from February 2020 benchmark measures.

If you strip out the bars and restaurants you get 41,000, and for those in health care, take a breath, because your area added 57,000 jobs, but building back a loss was 29,000 jobs gained in manufacturing, and those online purchases helped push 759,000 jobs forward of its pre pandemic posts.

Taking a closer  look we can see that labor force participation, a key indicator, took a tumble from 62.3 percent in May to 62.2 for June and this can be problematic, for as The Hill noted, “If fewer Americans are seeking jobs, businesses may have to offer increasingly higher wages to compete for workers. Firms may also raise prices for their goods and services as they attempt to meet rising demand without a large enough staff, which could fuel higher inflation.”

There is still a discrepancy between Blacks and Whites, especially for Black women, perhaps related to child care, as with their white counterparts, and CNBC reported that “The unemployment rate for Black women fell to 5.6% in June, down from 5.9% in the previous month,” but all things considered, even with a slight decrease overall from May, the picture is relatively stable noted Valerie Wilson, the Economic Policy Institute’s program director on race ethnicity, and economics said: “I think the bigger picture is that all of those numbers are within the range of where they’ve been in the last three months,” she said. “It’s a signal that the recovery is stable.”

Remaining the same is the unemployment rate, the marquee figure as we call it, at 3.6 percent, the same as last month, and with no significant jobs loss then the US is even as Steven, says an old cliche.

According to The New York Times, “We’ve essentially ground our way back to where we were pre-Covid,” said Christian Lundlad, a professor of finance at the Kenan-Flagler Business School at the University of North Carolina. “So this doesn’t necessarily look like a dire situation, despite the fact that we’re struggling with inflation and economic declines in some other dimensions.”

As many observers have noted, these gains may not last, and especially with the recession tools that the Fed has chartered, and as Sen. Elizabeth Warren said last month, with these rate increases comes unemployment.

The Times also observed that with 11.3 million workers in May, a record high,  “any workers laid off as certain sectors come under strain are likely to find new jobs quickly, for a time at least.”

For employers that means anxiety around hiring, especially as consumer spending is still facing bottlenecks, and some supply chain issues, those microchips are still not as plentiful. Hiring and filling new positions could be slowwalked, as they noted.

Wages did moderate to 5.1 percent, and wage increases that some employers have chosen to lure employees has also been part of the problem, for those that are concerned about inflation, the Fed included, and as the Times reported, Golddman Sachs officials have said that wages need to slow below 3.5 percent “to be consistent with the Fed’s inflation goals.”

While this would help with the historical goal of 2 percent inflation, prices have to be stable, as Chair Jerome Powell has noted because without it, “the economy’s really not going to work the way it's supposed to be.”

It’s a balancing act, of course, and with inflationary prices hitting 40 year record highs, along with skyrocketing rents, and other basics, too much, is as bad as too little.

Fed Chair Powell on the hot seat as inflation swells in US

It’s certainly not a secret that in the United States inflation is at a forty year high and that from Main Street to Wall Street there are fears and concerns about the increased cost of gasoline, groceries, and nearly everything else. Chicago has seen gas at $6.00 a gallon not far from Los Angeles, and filling the tank, for some vehicles can get to three figures.

The dollar stores are seeing huge influxes of shoppers eager to avoid the high prices at the local chain supermarket, and people are eager to spend less to make sure that meat and eggs can reach the breakfast table. 

In Washington the White House has said that the Federal Reserve with its twinned mandate of keeping inflation at 2 percent, and full employment, has the lead, but it has struggled to gain a foothold on the problem, and last week they raised the interest rates to three quarters of a point, the highest hike in 28 years.

At the September meeting there was another similar rate increase at the same 75-basis points and it seems that rate increase are here to stay until inflation is conquered, with some opining that this will continue at least into 2024, with predictions for 2023 from 4.24 percent to 5 percent.

Fed Chair Jerome Powell, backed into the corner by the Biden administration, was forced to admit that as CNN reported there are external factors that will make it harder to turn the corner, from that “soft landing” that we reported on earlier, and that mitigating forces such as the war in Ukraine, supply chain woes, caused by the coronavirus, were still taking its toll on the US economy.

He is supported by Mark Zandi, chief economist at Moody's Analytics, who has said,  "The primary culprit [of inflation] was higher energy prices, particularly gasoline, and a lot of that can be traced back to Russia's invasion of Ukraine that caused global oil prices to spike," he said in a recent episode of his podcast, Moody's Talks. Inflation should ease, when the pandemic subsides and the market adjusts to new sanctions against Russia.”

While gasoline prices have decrease with an average nationwide tag of $4.50 dollars, rents and food remain sky high.

"So much of it is really not down to monetary policy," said Powell at a press conference last week that those supply chain problems had lasted longer than he anticipated

.

In a recent mandated appearance before the Senate Banking Committee, he added, notably, and perhaps defensively, “We’re not trying to provoke, and don’t think that we will need to provoke, a recession,”  he stressed, “But we do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market, as much as anything else.”

Writing in The Guardian, Clara Mattei, an economics professor at The New School for Social Research, opined that shared pain of rising interest rates will hurt a lot pf people, and to that affect there is truth, if restrictions, such as last week’s surge in interest rates cuts cools down the economy, it will also cause many workers a job loss especially on the lower end, where their jobs will be low hanging fruit, to be quickly cut.

Sen. Elizabeth Warren told Powell at a recent congressional hearing, “Rate increases make it more likely that companies will fire people and slash hours to shrink wage costs,” 

“The cost of borrowing will also increase government expenses for public works and social services, forcing states to further cut their budget, hurting the most precarious parts of society that rely most on these services,”  Mattei stressed, and some other economists have said that intervention measures like more food stamp benefits might help mitigate some of these fallouts.

Mattei added a final warning saying that while, “Higher inflation is eating away at wage increases, but this does not mean lower costs for employers: compensation for private industry workers increased 4.8% over the year. By comparison, in March 2021, employers faced an increase of only 2.8%.”

Powell himself has acknowledged that these compensatory measures such as “lowering incentives for businesses to invest will produce unemployment,” and we see the risk involves planning to determine the correct balance to stem much of the expected  blood letting.

If it seems that the chair is being backed into a corner, his answers seem to make that even clearer. But, there are others that want to look to the future, and take a look down the tunnel for a possible gearing towards a recession.

Federal Reserve Bank President Loretta Mester said regarding both inflation and [a] later recession that, “It isn’t going to be immediate that we see 2% inflation. It will take a couple of years, but it will be moving down,” Mester said in an interview with CBS News this past Sunday.

According to CNBC, Mester also said she was not predicting a recession despite slowing growth; “We do have growth slowing to a little bit below-trend growth and we do have the unemployment rate moving up a little bit. And that is OK, we want to see some slowing in demand to get it in line with supply,” Mester added, referring to forecasts submitted in the past week by participants of the Federal Open Market Committee’s meeting.”

Added to the mix was this from The New York Times: “The Fed needs to hike policy rates more aggressively if it has any hope of bringing inflation down,” said Seema Shah, chief global strategist at Principal Global Investors. “If it’s going to have to tighten even more, then the chance of a recession is higher.”

These were pressures before as we noted in the March Jobs report, when we reported that “Many observers are mentally pushing Powell to increase the interest rate even further than the one-half point anticipated in early May,"

“The tightening from higher policy rates filters through the economy to make borrowing of all kinds — from mortgages to business debt — more expensive. That slows down the housing market, keeps consumers from spending and discourages corporate expansion, “ Shaw added.

But balance is needed since these moves are a ‘’blunt tool”‘ to use Powell’s terminology, and knowing when, and how to calibrate, is very tricky as many economists and academics note.

There are naysayers: “By the time you start to catch it and realize you did too much, you’re going to be deep in a trough,” said Dan Genter, the chief executive of Genter Capital Management, an investment advisory firm. “It’s going to take nine to 12 months before you see the total effects, and it takes that long to get out of it.”

 “All the talk of recessions and bear markets could also — at the margins at least — add to the economic pressure, in part because people see their investment, retirement or college savings accounts shrink and start to pull back on spending,” and with no sign of abatement in college tuition, many families are now becoming increasingly worried.

“The behavioral effect is that people will start to slow down on spending, become much more cautious, start to save more,” said Beth Ann Bovino, the chief U.S. economist at S&P Global. “That’s not a good outcome for the economy. It slows growth.”

The CPI report for July indicated that there was some relief with lowered prices on gas, airfares and used cars, to an increased rate of 8.5, lower compared with 9.1 the month before. And, while this offers some relief it is not the end, say most economists, which much more work to do, and that work is the domain of the Federal Reserve and expectations are for a less aggressive rate of half a point, versus the prior three-quarters.

One source of relief is the detangling of the bottle neck of the supply chain issues that so beleaguered world economies for so long, mostly attributable to problems in transportation and warehousing and shuttered factories, due to Covid.

We are not out of the woods on inflation, and Boston Fed president Susan Collins said, with great understatement, "at the moment, inflation remains too high."

Updated Sept. 27, 2022 at 2:04 p.m.CDT

US Job market slows but shows cautious optimism

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.”