July Jobs report is a cause for champagne in the US

If the June Jobs report was the occasion for an extra chocolate eclair on the breakfast plates of economists, then July with its whopping 528,000 non-farm payroll jobs, is now an occasion for champagne cocktails, after the US Labor Department issued the good news on Friday.

This news also brings the country to a milestone: each and every job that has been gained this year recoups the losses from the Covid pandemic, not an insubstantial feat, for a country that was brought to its knees with the pandemic wreaking havoc on the economic health of the world's largest economy.

The unemployment rate, what we call the marquee rate, descended to 3.5, from last month’s 3.6. There was a conundrum, of sorts, with a flattening of the labor force participation rate that has caused concern for some economists and observers, not to mention employers, looking to hire.

While, for some, it may be more of a backstory, it’s still a significant outlier for those whose job it is to study the economy, or at least follow a trajectory, and one of them is the Federal Reserve Board, whose twinned mission of keeping inflation at 2 percent levels, and the nation at full employment, has watched this report with some concern, especially with the overall increase in wages from 4.9 percent to 5.2 percent and with the series of scheduled rate increases, the last of which was 0.75, the highest in decades; but, now comes concern that these employment gains coupled with higher wages, needs a cooling down to avoid higher inflation, and we will have to wait till September to see what the Fed will do.

Of course, the R word has been bandied about so much in the general media, that many want to see the word banished from the vocabulary of news programs as the continued lead stories on radio, television and the internet, is “Folk’s we’re headed into a recession.”

For those that stayed awake in Econ 101, it’s easy to see that this is pure fallacy: 376,00 jobs for June and 528,000 for July, it’s better to state, “Ain’t no way!”

This strong labor market is one that Chair Jerome Powell has also cited as a reason to say that the US is not in a recession.

Jerome Powell

The agreed upon wisdom is that there must be two quarters of retraction in the GDP which we have had, but absent rising unemployment, and other facts, we are not. Those other factors are: “falling retail sales, and contracting measures of income and manufacturing for an extended period of time.”

Of course, despite the high wages, prices are well, high, as anyone who pumps gas at the station knows, wages are not keeping up with inflation. For example, a local fast food supervisor told us that he can’t even get a full tank on his kid-friendly SUV, without shelling out $100.00.

Some drivers are feeling a sigh of relief at an average price of $4.79 a gallon as welcome news.

There are concerns present with the household survey standing at a nearly unchanged labor force participation rate of 62.1, even but that alignment, even with the upward revisions for May, and June, shows that the American economy is much more robust, and resilient, than many would have thought.

“As long as you’re above 200,000, you’re still doing better than pre-pandemic and it’s still strong, “said Diane Swonk, chief economist at KPMG. “It doesn’t feel very good, because it’s being accompanied by inflation,” reported CNBC.com

From all reports it seems that the Biden Administration's efforts with a slimmed down version of the “Build Back Better Act” is destined to become law after weeks of negotiation with Sen. Joe Manchin of West Virginia and also the support of Arizona Sen. Krysten Sinema, both bulwarks against the previous bill.

With its increase in increased tax rates for high income earners, the estate tax, and a much championed push for a tax on billionaires, and while broader tax increase are missing that were much desired such as, capital gains, to 25 percent, and a restoration of the “the top income tax rate of 39.6 percent, among others, the legislation is expected to bring down inflation with efforts by the Federal Reserve.

Tax experts and economists expect that the reduction will be felt over years, and not months, and one source, according to Vox.com “Shai Akabas, director of economic policy at the Bipartisan Policy Center: I think it’s likely to have a modest downward effect on inflation, so directionally, I think it is likely to push downward on prices. But that’s unlikely to be the primary effect of the legislation, given how many specific policies there are.

Most of the impact on inflation and the broader economy from this legislation is likely to be medium-term, not felt in the immediate next few months, which is how households are thinking about inflation.”

He also added an important note: “That’s largely because there’s very little that policymakers can do, certainly on a legislative basis, to impact inflation overnight. That is primarily the job of the Federal Reserve. … There’s not much you can do, absent overnight taking lots of money out of the economy, out of people’s pockets — which is not something that Congress likes to do or almost ever does — that is going to dramatically change the immediate inflation outlook.”

The push to bring down inflation is needed, as Swonk noted, when she said, “At the moment, inflation is hurting everyone. It’s an equal opportunity scourge at this point,” and Michael Gapen, chief U.S. economist at Bank of America, added “What policymakers are faced with is pushing the unemployment rate higher.”

That would also affect unemployment especially on the lower rungs of service and retail jobs, especially in two income families where female employment is mostly seen.

Gapen also feels that by the end of the year, “job growth could turn negative, followed by the possibility of several monthly reports of job losses as high as 150,000. He expects a shallow recession to take hold by then,” they added.

Right behind him is Swonk who “said she also sees payrolls turning negative, with monthly job losses between 100,000 and 200,000.”

While the service sectors such as leisure and hospitality have seen the greatest growth, 96,000 along with that catch all category of business services have expanded to 89,000, these numbers represent an expansion of a much needed workforce, with some previous barriers such as marijuana convictions, and the lack of a college degree deleted.

Diane Swonk

As Gapen and Swonk indicate these growth areas could be those cut by year end. But, this has also seen cuts on the corporate side when Walmart has targeted 200 corporate jobs for layoff, as noted in a New York Times report, quoting their announcement that “American consumers were pulling back on purchases of general merchandise to focus on necessities like groceries. The company said it expected operating profits for the full year to fall by as much as 13 percent, as the company was forced to continue marking down inventory that wasn’t selling.”

CNBC also quoted Wells Fargo Institute who expect that by the end of this year, “unemployment will tick up to  4.3% . . .”

President Biden has acknowledged that job growth will slow by the end of the year, and that despite contractions does not mean the economy is tanked.

Speaking of tanks, when Biden made his first trip to the Middle East and met with Gulf Leaders of Saudi Arabia it was hoped that he could bring down the price of gasoline that has forced millions of drivers in the US, and the UK, to cut back, often, on needed trips.

Unfortunately, these leaders were less than willing to budge much, and production has increased to less than one-tenth of one percent, or 100 barrels per day, an almost negligible amount that will surely not only show little effect on the needs of consumers, and will be cause of concern in the West Wing as Biden faces increased GOP criticism, as he heads to the November midterms.

While that maybe a worry for the president, American consumers have their own worries and fears about budgets, food on the table and educating their children all of which needs to be met, just as inflation nibbles away at the edges.

Monkeypox, politics, and fear create frenzy across US

All politics are local, according to the old adage, and that seems to be true, now more  than ever with the Monkeypox virus that has spread across the United States which began this Spring and rose to approximately 5,200 cases mostly among gay men, or those who have sex with other men, regardless of self identification, and those with multiple  partners. 

The New York Times also reported, “The Centers for Disease Control and Prevention reported on Thursday that the United States has now confirmed more than 4,600 cases of monkeypox, which has already been declared a global health emergency by the World Health Organization. The U.S. case count is among the highest in the world, and the figure is almost certainly an underestimate. Men who have sex with men comprise 99 percent of the confirmed cases so far.”

While the virus is not limited to gay men, fears of stigmatization are already present, and many virologists and epidemiologists are anxious to emphasize that fact, as are gay community leaders.

Monkeypox was first seen in Europe in early May, shortly before it reached epic proportions in New York City, and Washington, DC, in late June, but, also in other large cities such as San Francisco and Chicago; and London Breed, San Francisco’s mayor, was forced to declare a public health emergency.

The approved vaccine was long stuck in a bottleneck in a Danish factory, until recently, when the FDA visited it to give final approval and there were long lines in both New York, and Washington, which forced many health providers to give only one dose of the two dose regimen.

Much like the early days of covid, testing has not been emphasized, and some say the five labs the government has contracted with, still leaves the nation short.

Biden administration efforts

The Biden-Harris administration earlier issued a white paper discussing its humanitarian efforts, but it was not seen by many, and with long lines many likened it to the huge supply problems faced with the covid vaccine that initially had severe supply issues.

While few in the LGBT community have been openly critical of Biden, with one saying, “at least he isn’t advising people to drink bleach like Trump,” but if supplies continue to be limited, that might occur, and with his sunken ratings, this is the last thing he needs before the November midterms.

Previously, Politico announced that Biden was poised to declare monkeypox a health emergency, one that is made by the US Department of Health and Human Services, and much like other national disasters would release “a slew of actions, including accessing new money and appointing new personnel, according to the law that dictates how and when the federal government can declare such an emergency.” 

Earlier this month, the Biden Administration announced that it has directed the Health and Human Services director to announce a national health emergency.

The New York Times reported that Xavier Becerra briefing the press said, “We’re prepared to take our response to the next level in addressing this virus, and we urge every American to take monkeypox seriously.” 

While some lawmakers have urged the administration for more action, and a list of the steps it has taken to advance help and to increase supply, "AIDS activists, who have been sharply critical of the administration, have been demanding an emergency declaration for weeks. “This is all too late,” said James Krellenstein, a founder of PrEP4All, an advocacy group. “I don’t really understand why they didn’t do this weeks ago.”

For those hoping that this declaration would increase vaccine supply, this is not to be, "Declaring the emergency would not ease that shortage, but the administration may take steps to allow quicker access to tecovirimat, the drug recommended for treating the disease," they added.

What does it do? "The emergency designation would allow the F.D.A. to authorize measures that can diagnose, prevent or treat monkeypox, without having to go through the agency’s usual exhaustive review. The agency relied heavily on this provision to speed tests, vaccines and treatments for the coronavirus."

Declaring an emergency also gives the Centers for Disease Control and Prevention more access to information from health care providers and from states. Generally, federal agencies like the C.D.C. cannot compel states to share data on cases or vaccinations.

Tom Ingelsby, director of the Johns Hopkins Center for Health Security at the Bloomberg School of Public Health, told them, “We’re having a lot of challenges around the country with their rate of rise in terms of new cases,” and while “not a high threat to the general population, . .  . it has the potential to spread to additional vulnerable communities.”

In agreement, Dr. Tom Frieden tweeted, “The recent outbreaks of monkeypox, and Marburg show why we better learn the lessons of Covid. Unless we make significant investments in global health and strengthen systems to quickly find and stop new disease threats, we and our children will face the consequences.”

Frieden is the former commissioner of the New York City Department of Health and Mental Hygiene (2002–2009) and is now president and CEO of Resolve to Save Lives, a $225 million, five-year initiative to prevent epidemics and cardiovascular disease, according to his Wikipedia profile.

Monkeypox has symptoms raging from a rash, or sores anywhere on the body, including the genitals, and often with flu-like symptoms, and can include swollen lymph nodes and is often spread through sex, and other intimate actions, such as kissing and physical contact; but, also with sharing infected towels, clothing, bedding, and other materials. But, to note, symptoms can appear, without a linear pattern, therefore making testing essential.

The sores can also be extremely painful, and gay men have been advised to refrain from sex, by some health personnel, and to immediately test if symptoms occur.

Vaccine shortages

Despite the arrival of more vaccines, the US is still critically short of what is needed and according to the Washington Post, “Even with the latest shipments, there are only enough vials of the two-dose Jynneos vaccine to cover about a third of the estimated 1.6 million gay and bisexual men who officials consider at highest risk and who are being urged to get the shots.”

Latest reports are that there will not be more deliveries nationwide until October, but The Post continued, “The shortfall of Jynneos, the only vaccine approved by the Food and Drug Administration to protect against monkeypox, has health officials at every level of government scrambling to come up with strategies. Those in hard-hit communities like New York City and D.C. have opted to give out only one dose for now, against regulators’ advice, while pushing federal officials for larger allotments.”

Previously San Francisco’s KTVU reported  that San Francisco had 281 probable and confirmed monkeypox cases. This makes up 33% of cases statewide. Breed said data shows that San Francisco has been hit the hardest and health officials don’t want to wait another day to get people the testing, vaccines and treatment they need.”

They later expected, "to receive 4,220 monkeypox vaccine doses, enabling Zuckerberg San Francisco General Hospital to reopen a vaccination clinic on August 1 that closed July 13 and again this week when supplies ran out.”

Breed has emphasized that "This is not going to be ignored. This is a public health crisis," Breed said in her calls for more vaccines.”

Personal appeals to local Chicago lawmakers resulted in responses that held the Feds accountable for the supply problem, and that they could not give what they didn't have, with some being almost defensive.

We witnessed long lines of men, in nearly 90 degree heat, in Chicago waiting outside the offices of Test Positive Aware Network, (TPAN)  for two hours, only to be told that the vaccine had run out and to come back the following week, and that those with a number, an unknown fact to many, would then get vaccinated;  which in turn caused one bystander to remark, “This is just like Covid.”

There were also unconfirmed rumors that some social venue vaccination efforts in Chicago, anxious about supplies, vaccinated some people ahead of others.

Scott Gottlieb, a former commissioner of the Food and Drug Administration, and now a senior fellow at the American Enterprise Institute, opined in The New York Times that “Our country’s response to monkeypox ‌‌has been plagued by the same shortcomings we had with Covid-19. Now if monkeypox ‌gains a permanent foothold in the United States and becomes an endemic virus that joins our circulating repertoire of pathogens, it will be one of the worst public health failures in modern times not only because of the pain and peril of the disease but also because it was so avoidable . . . We don’t have a federal infrastructure capable of dealing with these emergencies.”

According to the Illinois State Rep. Kelly Cassidy’s earlier email newsletter, “CDPH (Chicago Department of Public Health) has distributed over 5,000 doses of the vaccine and reports they are expecting a delivery of an additional 15,000.” 

Many say that even this is not enough, and criticize the early decision to vaccinate only those with confirmed or, “likely contacts of monkeypox patients.”

In a recent interview on WAMU’s ‘1A”, epidemiologist Dr. Celine Gounder noted that more studies need to be done on the efficacy of one dose, while many are waiting for the arrival of more vaccines, and with concerns of those who are not having multiple partners, waiting for the vaccine, she analogized to a neighborhood that is on fire and that water must be given only to the houses that are actually burning.

The Biden paper noted that “as additional doses are received from the manufacturer, HHS will make them available to jurisdictions to expand availability to the vaccine for individuals with elevated risk.”

State level efforts

Illinois governor JB Pritzker had urged the Centers for Disease Control and Prevention, “to use the tools available at the federal level to immediately increase the availability of vaccines in at-risk communities, “ Cassidy wrote

Shortly afterward, in a late development, he declared Illinois a public health emergency, and said, ““MPV is a rare, but potentially serious disease that requires the full mobilization of all available public health resources to prevent the spread.”

This will ensure smooth coordination between state agencies and all levels of government, thereby increasing our ability to prevent and treat the disease quickly. We have seen this virus disproportionately impact the LGBTQ+ community in its initial spread. Here in Illinois we will ensure our LGBTQ+ community has the resources they need to stay safe while ensuring members are not stigmatized as they access critical health care.”

Illinois currently has the fourth highest cases in the nation, 888, with Chicago at 460. Overall the US has, at current estimate 14,115.

In its local coverage, NBCChicago.com reported, “officials can [now] more easily secure vaccine shipments and ramp up distribution to ensure the most impacted communities receive treatment as soon as possible."

Funding needed

Of course, going further also requires money, and in a private estimate, some federal officials said, on deep background, that  $7 billion is needed to even meet “the scope and urgency of the current situation”, their reporters revealed.

Breaking it down, in an internal memo that Post reporters obtained, there would be $6.9 billion needed to have the vaccine made in the US, and “could also secure $19 million new doses of vaccine for monkeypox, replenish 4 million doses for smallpox preparedness efforts and more.”

Returning to vaccine supply shortages: “Some experts also are advocating that people be encouraged to take a less desirable vaccine, ACAM2000, which was approved for the related virus of smallpox but not for monkeypox.”

“There are not enough shots” to pursue a strategy of relying solely on Jynneos, said a federal official working on the monkeypox response, who spoke on the condition of anonymity because they were not authorized to comment, warning of a possible “vaccine cliff” in coming weeks,” added the Post..

Dosage variance and advice to address shortages

“Some experts have called on U.S. officials to instead encourage Americans to get vaccinated with ACAM2000, which was approved for smallpox, a related virus, and that the United States had previously stockpiled in case of a potential outbreak. That vaccine relies on injecting people with a live, if weakened, virus, which carries additional risks. It also is administered in a series of rapid punctures that can draw blood and lead to scarring. The vaccine is available as needed, although public health officials have been wary of relying on it.”

 

ACAM2000 is not recommended for those with compromised immune systems, and with many people still living with HIV in the gay male population, the risks are enormous.

 

“No one’s crazy about it. You shouldn’t be crazy about it. But you should give people the choice,” said Ezekiel Emanuel, a bioethicist who has advised the Biden administration on coronavirus and attended a White House briefing this week on monkeypox,” according to the Post.

Earlier reports at the end of July from the City of Chicago said that there was an increase in vaccines and that, “Those 33,000 doses will come from the nearly 800,000 doses that were cleared by the Biden administration . . . to arrive over the next several weeks.”

 

Even more alarming is this: “Even with the latest shipments, there are only enough vials of the two-dose Jynneos vaccine to cover about a third of the estimated 1.6 million gay and bisexual men who officials consider at highest risk and who are being urged to get the shots.”

One shot or two? Or half?

Previously, “U.S. officials said that they have now secured 1.1 million Jynneos vaccine doses, including 786,000 doses finally cleared by regulators after being delayed in Denmark for more than a month, and which will “be in the hands of people who need them over the course of the next several weeks,” Becerra said in a later press conference. Federal regulators reiterated Friday that the vaccine should be given to most people as a two-dose regimen, meaning that U.S. officials have enough shots to cover about 550,000 people.”

As we have seen, that is being ignored in some areas, and while the studies are yet to be done, using one shot, there is some evidence to suggest that they can be effective as 2 doses, but this has also provoked a fierce debate among researchers and physicians, and as Goudner said, in the absence of studies, there is a feeling that many providers are taking what they can get. 

In a recent development, in order to ensure adequate vaccine supplies, there has been a move to fractional shots, "which allows providers to use only one-fifth of the current dosage. The vaccines may now be administered intradermally or between layers of skin, rather than in the fat layer under the skin," noted the Times in a recent update.

While there have been no objections by the manufacturer of the vaccine, this method may increase side effects "such as redness, swelling and firmness." And, there has only been one study that examined this method.

Another factor is training, not many of the providers in the US have that training, and there is the perception among  some Black men, receiving the vaccine with that method, may feel slighted; and, already the overwhelming recipients have been white men.

“The 500,000 additional doses that the U.S. ordered in June is anticipated to be delivered this year,” a Bavarian Nordic spokesperson wrote in an email, declining to respond to specific questions about timing or the company’s commitments to other countries.”

Giving some hope was “Sarah Lovenheim an HHS spokeswoman [who] said officials had expedited the doses announced this week and were working to accelerate future shipments, too.

“We’ll seize every opportunity to speed up the path to secure more doses ahead of schedule, as possible,” Lovenheim said.

Another problem is that there has been a change in delivery systems that health care officials across the nation have said is burdened by "missteps and confusion", reported the Times; and, the distribution system VTrcks, noted for its efficiency and linkage to state systems has not been used for this vaccine, and instead is using email, instead of a distribution system and orders have been severely delayed, and in one instance a shipment to Ft. Lauderdale, Fla, was reported as being sent to Oklahoma, then Mississippi, and then Florida.

While HHS has switched to a different system it is still not linked to state immunization databases.

“Peter Hotez, dean for the National School of Tropical Medicine at the Baylor College of Medicine, said he was open to the idea of “dose sharing” as a temporary fix, suggesting that people could get one dose of Jynneos and one dose of ACAM2000.”

“We don’t have much of a window to fix this,” Hotez said. “Once it gets into the rodent population, it becomes a fixture here, like it’s been in Central and West Africa.”

Updated August, 20, 2022 at 4:25 p.m. CDT

Please note that this is an evolving story, and will be updated as needed.

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.”