The American economy gained 175,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at 85,000 jobs. Yuck. The headline unemployment rate ticked up to 3.9%.
Average weekly earnings dropped 1.1% in April on an annualized basis. Adjusted for inflation, that's a decline of nearly 6%. That's a big drop. The Fed certainly shouldn't have any further illusions about the economy overheating or worker pay increases driving inflation.
May 2024:
May 2018:
74,000 net new jobs was meh. 85,000 net new jobs is yuck…
inflation
😉
Different economic times. 2018 was a year of relative economic and job stability. 2024 a year of "inflation fighting" in order to slow the economy because it's growing too fast. Doesn't seem to be growing too fast. Could be ominous.
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Not really. I was curious though what previous responses were so turned to a web search.
You gotta be more explicit, nobody knows what this is supposed to mean.
The Fed needs to declare victory and cut rates.
Inflation, of course, remains above the target of 2%. The target, of course, is insane, and the only way to reach it through high rates is to destroy all that's good about the current economy. Cut rates and two things will happen: a) the housing market will begin to normalize (it hasn't been normal since the bubble 20 years ago); and b) inflation will come down further.
For ten months straight, inflation has been below 4%. Hey, Jay, you won!
The poor and middle class can never be reminded too often or too harshly that the rich are in charge, and destroying the economy for everyone (but the rich who invariably get bail outs) does so quite nicely.
Yes.
The Fed has been woefully out of touch and confused over the lsst few years. The have a hammer and want to use it. No matter what the actual problems are, they have assumed (guessed?) that everything is a nail....and whatyaknow, we have just the tool for nails!
They have been lucky inspite of severe mismanagement. Hopefully their/our luck continues.
...and now the stock market is back up....
Certainty, politically, Biden would like to see a couple Fed rate cuts in the near term. It is likely, that lower rates would help the equities markets, real estate etc....
This is the biggest reason to doubt any rate cuts will happen this year. The centrists that run the Fed Reserve aren't going to want to be thought of as putting their thumbs on the scale for a Democrat, so best be prudent in holding off on rate cuts until after November.
Austin this article would support your comment
https://www.niskanencenter.org/does-the-biden-economy-have-bad-election-timing-or-an-unfair-fed/
Given that the little inflation we have now is entirely driven by the real estate market, the last thing we want is to prop it up.
Lower interest rates would boost the supply of housing and while lowering the monthly cost of buying and renting. It would not increase the monthly cost of housing.
There is a lack of supply problem with housing, not a too much demamd problem.
Whether you're looking at job creation or GDP or whatever, it's fairly commonplace to see a low monthly number following a high number (or vice versa). Remember these are all seasonally adjusted. If, for example, we get an unusually warm March, many of the construction jobs that would have been created in April get moved up. That makes the March numbers unusually high but depresses the April numbers.
Everyone knows not to read too much into monthly numbers, but they do it anyway. It always reminds me of so many shaman poring over the entrails of a sheep trying to divine the future.
I don't quite understand this.
If we need 90K jobs to keep up with population growth, and we add 175K jobs, why is that number considered "bad?" If we had high unemployment, sure, you'd want to see us making bigger strides to close it. But if the unemployment rate is at a healthy low (as it currently is), then shouldn't we expect job growth to roughly match working-age population growth?
"why is that number considered "bad?"" Because it's typically been 300,000 for Biden's stay in the whitehouse. The similar reason why the smaller number (75k) for May of 2018 was ok, is that Trump almost never exceeded that smaller number. It's he game of expectations. Economists are used to great numbers when a democrat is president and used to crap numbers when a republican is president.
From its peak exactly two years ago, the Fed has unloaded $1.6T in assets, of which ~$1.2T were Treasury bonds and ~$400B were in mortgage-backed securities.
Even while the Feds hold the central rate steady, they're still creating downward pressure on the market.
People have an underappreciation for how strong the US economy is.