Despite the predictions, The Labor Department’s Bureau of Labor Statistics claimed payrolls for the month increased by 678,000 and additionally, the unemployment rate was 3.8%. Just as the report claimed for January the employment rates have once again increased tremendously in February leading economists to believe the rate is getting closer to employment reports before the COVID-19 Pandemic. Analyzing the market, the statement raised the total amount of Americans who were employed, while it was still 1.14 million behind levels before the Pandemic. From October to December of 2021 Towards the end of 2021, there were 10.9 million unfilled positions, a record-high gap that left nearly 1.7 positions for every employee. Vacancies continue to be a major barrier to filling these positions.
Additionally, the Bureau of Labor Statistics also recorded the national wage only rose by 1 cent per hour (0.03%) in comparison with the expected 0.05% gain which economists are led to believe that current inflation may be on its downfall soon. Senior economists for the job placement site Glassdoor claim, “This report indicates that the job market is healthy and resilient to the ebbs and flows of the pandemic.” Employment rates have been persistently coming back to fight the lows of the pandemic as the United States has seen an increase in employment of over 400,000 opportunities each month since June 2022. As more Americans return to being employed with the pandemic regulations and restrictions fading, economists are expecting strong job growth in the future.
However, with the increase in employment rates investors today are left questioning when will the employment rate really begin to slow down. Senior economics and strategist Eric Winograd at Alliance Berstein says, “Until the pace of hiring slows significantly, the Fed[eral Reserve] won’t be able to think about pausing rate hikes.” A high employment data defying expectations is probable to convince the market to believe that the Fed will hike interest rates once again in July.
https://www.morningstar.com/articles/1142099/markets-brief-what-to-watch-in-the-february-jobs-report
https://www.cnbc.com/2022/03/04/jobs-report-february-2022.html
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.nytimes.com/live/2022/03/04/business/jobs-report-february-2022
2 comments:
Having strong employment is a good thing, and generally nobody wants to see the unemployment rate high. A strong job market is almost always viewed as positive by the public and politicians, with one exception – when it causes or contributes to high inflation. Inflation is like a hidden tax which impacts the lowest paid workers the most, as basic staples and services needed to live all go up in price, often faster than wages. This leads to a decline in money available to spend on other things, and the standard of living falls. This is where the Federal Reserve steps in and tries to fight inflation by raising interest rates. Higher interest rates will cause the economy to slow down as businesses and consumers borrow less and spend less. However, the rise in interest rates have not slowed the economy significantly yet, and inflation continues to be high with interest rates going higher as employment continues to be strong. It seems unfortunate that the only way to combat inflation is to cause people to lose their jobs and likely push the country into a recession, but that might be where things are headed with the continued rate hikes.
While a lowering rate of unemployment is great the ever-gradually rising cost of living within the US is not proportional to the average amount of money that an American makes. I think that if inflation continues to increase then regardless of how many people have jobs, even stable ones, the level of poverty will also begin to increase. If the Federal Reserve's plans to decrease inflation by increasing interest rates work then that is great, but overall I think that only surface-level data is being looked into when making these types of potentially life-altering decisions. Although the rate of unemployment has decreased how many of the people who now have jobs are still struggling with the same finances as before they held their current career positions? Hopefully, the rising interest rates can help alleviate some of the pressures that inflation is currently creating but in the long run, more research should be done on how the average American can survive with the current cost of living given their salary.
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