US Economy

[ninjahood]

The Economy That Wasn’t Supposed to Happen: Booming Jobs, Low Inflation

Maybe using data from a few decades in the middle of the 20th century to set policy in the 21st isn’t such a good idea.

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By Neil Irwin

• May 3, 2019

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At a May Day rally in New York. Average hourly rates have continued to rise, as a tight labor market has started to be reflected in wages.CreditKathy Willens/Associated Press
The labor market the United States is experiencing right now wasn’t supposed to be possible.

Not that long ago, the overwhelming consensus among economists would have been that you couldn’t have a 3.6 percent unemployment rate without also seeing the rate of job creation slowing (where are new workers going to come from with so few out of work, after all?) and having an inflation surge (a worker shortage should mean employers bidding up wages, right?).

And yet that is what has happened, with the April employment numbers putting an exclamation point on the trend. The jobless rate receded to its lowest level in five decades. Employers also added 263,000 jobs; the job creation estimates of previous months were revised up; and average hourly earnings continued to rise at a steady rate — up 3.2 percent over the last year.

Compare that reality with the projections the Federal Reserve published just three years ago. In mid-2016, Fed officials thought that the long-run rate of unemployment would be around 4.8 percent, and that this would coincide with 2 percent inflation.

If that were the jobless rate today, 1.9 million Americans would not be working who are instead gainfully employed. And despite this ultralow unemployment rate, inflation is only 1.6 percent over the last year, below the level the Fed aims for.

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The breakdown of the old guidelines suggests that policymakers need to avoid overreliance on them, and to stay broad-minded to the full range of economic possibilities. Maybe using data from a few decades in the middle of the 20th century to set policy in the 21st isn’t actually a good idea.

The results of the last few years make you wonder whether we’ve been too pessimistic about just how hot the United States economy can run without inflation or other negative effects.



https://www.nytimes.com/2019/05/03/upshot/unemployment-inflation-changing-economic-fundamentals.html

 

[Zainjal26]

It’s a bubble, it will pop eventually.

Mainly because we have a doofus in the Whitehouse who can’t even spell

 

[ninjahood]

It’s a bubble, it will pop eventually

its da longest monthly consecutive growth ever... idk bout that..

Job creation smashes expectations, unemployment rate falls to 49-year low

Emily McCormick
Yahoo FinanceMay 3, 2019, 12:30 PM GMT

The U.S. labor market charged ahead in April.

The economy added 263,000 non-farm payrolls for the month, the Bureau of Labor Statistics reported Friday. This topped expectations for 190,000 new positions, according to consensus estimates compiled by Bloomberg. March’s payroll additions were downwardly revised to 189,000, from 196,000 previously.


The unemployment rate fell to 3.6% for the month, the lowest level since December 1969. Consensus economists had anticipated that unemployment would hold at March’s 3.8% rate.

Meanwhile, the labor force participation rate fell slightly from March to 62.8%, but was unchanged from the year prior. The broad U-6 gauge of unemployment – which captures the underemployed as well as those who have ceased looking for jobs and – held at 7.3%, the same level seen in both February and March.

Average hourly earnings rose 0.2% month-over-month and 3.2% year-over-year, the same paces seen in March. Consensus economists had anticipated hourly wages to increase by 0.3% on a monthly basis and 3.3% on an annual basis.

Positions in the manufacturing sector grew by 4,000 in April, reversing a decline of 6,000 seen in March. However, this came in short of the 10,000 new manufacturing positions expected. Manufacturing job creation has been closely watched amid softness in the sector as a whole, with the Institute for Supply Management’s factory gauge falling to a two-year low in April.

The Bureau of Labor Statistics report comes on the heels of mixed employment data from other closely watched labor market indicators. ADP/Moody’s reported earlier this week that private payrolls increased by 275,000 in April, or nearly 100,000 positions more than expected. However, initial unemployment claims, which had been trending lower, recently rebounded, with Thursday’s latest reading showing new jobless claims rose by 230,000 on a seasonally adjusted basis during the last full week of April.


2019 Berkshire Hathaway Annual Shareholders Meeting
Meanwhile, the economy on the whole has shown signs of trending higher, based on the much stronger-than-expected reading on first-quarter GDP last week. According to that report, the U.S. economy grew at a pace of 3.2% in the first three months of the year, surging ahead of consensus expectations for 2.3% growth.

Fed Watch
Friday’s jobs report comes just two days following the Federal Reserve’s latest monetary policy decision and commentary from Fed Chair Jerome Powell, in which the central bank characterized economic activity as “solid.” The Federal Open Market Committee (FOMC) decided to keep key interest rates unchanged at a band of between 2.25% and 2.5%, with Powell subsequently telegraphing that the central bank does not see a “strong case” to change interest rates in either direction at this point.

In the statement, the FOMC noted that “job gains have been solid, on average, in recent months, and the unemployment rate has remained low.” Powell also said that he saw no signs of an overheating economy, and that wages have grown at an “appropriate” rate.

Friday’s jobs report looks to have affirmed the Fed’s stance, said Mark Hamrick, Bankrate.com senior economic analyst.

Non-farm payroll additions totaled 263,000 for the month of April, while the unemployment rate fell to a 49-year low.
“The Federal Reserve looks at the past couple months of employment reports and certainly feels no urgency to cut rates as many investors have been hoping, or I’d say speculating,” Hamrick said. “As Fed officials’ favorite inflation gauge hasn’t been blinking red, they’ll remain relatively comfortable with leaving rates unchanged for the near-term.”

Central bank officials have been fixated on inflationary signals to determine the direction of future monetary policy, with Powell saying Wednesday he believed factors contributing to the current low levels of inflation were “transitory.”

While average hourly wages serve as one indicator of inflation, that metric isn’t as closely watched by Fed officials as their preferred gauge of underlying inflation, or core personal consumption expenditures (PCE). Core PCE came in at 1.6% year-over-year in March, well below the Fed’s 2% target.

“The April report brought strong job growth and lower unemployment. Wage growth is comfortably above inflation, and the fact that it failed to tick up serves to stifle any talk of a rate hike,” Curt Long, chief economist for the National Association of Federally-Insured Credit Unions, wrote in an email. “The Fed is in a good spot right now, as the warning signs of a recession have abated, but without any fear of economic overheating.”

https://finance.yahoo.com/news/april-jobs-report-2019-220932515.html

 

[tr1ll]

It’s a bubble, it will pop eventually.

Mainly because we have a doofus in the Whitehouse who can’t even spell

That doofus is going to swear that this is the fruits of his labors and his followers will believe it.

 

[pdino]

Plenty of jobs out there. Problem is we gotta work 2-3 of em to get by. Side hustles are the norm now, not the exception. Grandpa got through school with no loans, owned property, cars of his dreams, working one full time job

 

[tkthafm]

"this time it's different"

 

[frshstunna]

If only wages could Increase to balance out the cost of living then ppl would really be set

 

[americangenius]

Plenty of jobs out there. Problem is we gotta work 2-3 of em to get by. Side hustles are the norm now, not the exception. Grandpa got through school with no loans, owned property, cars of his dreams, working one full time job

These statistics are close to meaningless (U-6). Many of these jobs are not full time, and cost of benefits lost far outweigh the marginal wage increase. Dudes driving Uber for a living barely making minimum wage for example aren't unemployed, but are considered contractors.

The calculation for inflation is often incorrect. Cost of living index excludes food, utilities, and other factors which have drastically increased over the past few years.

Anyone with two eyes can see the economy is not what it was two decades ago.

 

[cedric ceballos]

Plenty of jobs out there. Problem is we gotta work 2-3 of em to get by. Side hustles are the norm now, not the exception. Grandpa got through school with no loans, owned property, cars of his dreams, working one full time job

I always say that not all jobs are good jobs and you get what you pay for as an employer. I’m big on quality over quantity.

I’m lucky enough that my side hustles and other activities give me enough to get by without working (just had a baby so in no rush to get back to work unless it’s the ideal situation pay and schedule wise if I’m getting enough to get by without work)

 

[boris]

Plenty of jobs out there. Problem is we gotta work 2-3 of em to get by. Side hustles are the norm now, not the exception. Grandpa got through school with no loans, owned property, cars of his dreams, working one full time job

If only wages could Increase to balance out the cost of living then ppl would really be set

The economy doing well doesn't matter much to the average American if they're working multiple jobs with low pay.

 

[sharpshooter718]

It’s a bubble, it will pop eventually.

Mainly because we have a doofus in the Whitehouse who can’t even spell

Stop blaming trump for what could or could not be true... the president is not directly responsible for the job market. The banks are not responsible. It’s simple supply and demand. If there is a demand for a particular skill or asset it will move. If not it won’t... simple.

Boom and bust cycle exist in every part of the game. Deal with it

 

[sharpshooter718]

65k in 2019 is different than 65k in 1999

 

[sharpshooter718]

The real problem is the devaluation of the world reserve currency. Things aren’t getting more expensive, the dollar is just losing value really fast....

 

[Betonblck]

Is that why the Fed can't increase interest rates beyond 2.5% without the entire economy crashing.

If the fundamentals of the economy were that great, someone in the White House would not be complaining everyday that the Fed needs to cut interest rates.

It's a solid economy but we can't ignore the fact that it is all based on having historically low interest rates and credit expansion.

 

[sharpshooter718]

Is that why the Fed can't increase interest rates beyond 2.5% without the entire economy crashing.

If the fundamentals of the economy were that great, someone in the White House would not be complaining everyday that the Fed needs to cut interest rates.

It's a solid economy but we can't ignore the fact that it is all based on having historically low interest rates and credit expansion.

Too much artificial money in circulation.

 

[ninjahood]

The real problem is the devaluation of the world reserve currency. Things aren’t getting more expensive, the dollar is just losing value really fast....

you shouldn't google "modern monetary policy" a certain fringe group is pushing for...

 

[doublemesh96]

MAGA

 

[shibadekobe]

It's sad but we're following the Japanese economic model. If they can "manage" a near 30 yr recession by QE, cutting rates into negative rates, govt purchasing shares of companies...we can do it too

When the FED initiates QE4 & cut rates...Tepper rip your face off v2

 

[mplsdunk]

I need that inflatable rat.

We just signed our contract today, wages went up but not what I wanted. Me and all the young dudes voted no. All the old company guys messed it up.

Oh well.

Wages will continue to be trash until people realize they gotta organize. I’m not gonna say I’m rich but I’m not out here making peanuts and working 3 jobs either.

 

[getback]

Empty stats.

We don't have an unemployment problem. We have a good jobs problem. How many times does this have to be reiterated on here?

Of course unemployment gonna drop when you have companies like Amazon pimping people out with those trash warehouse and driver jobs.

 

[mplsdunk]

Bro those amazon drivers run for their lives when they drop packages off.

 

[boris]

Empty stats.

We don't have an unemployment problem. We have a good jobs problem. How many times does this have to be reiterated on here?

Of course unemployment gonna drop when you have companies like Amazon pimping people out with those trash warehouse and driver jobs.

I definitely agree that we have a good jobs problem. I can't complain too much about my situation cause I get good pay with a good work/life balance. However, I know people in other departments at my company that are expected to work 10-12 hour days plus weekends and for less pay than me.

 

[Chopper]

Economy is humming. Real inflation (food) is up major though too. Education, health, and environment are going to ****.

 

[nawghtyhare]

Bro those amazon drivers run for their lives when they drop packages off.

Bruh
They knock drop the package and run
I be tryna catch em
I open the door
They look back like a deer in the headlights
Why they be doing that???

 

[mplsdunk]

Bruh
They knock drop the package and run
I be tryna catch em
I open the door
They look back like a deer in the headlights
Why they be doing that???

Their little computer must detect if they stop moving and fire them or something.

If you like door ditching why not work for ups or usps? I don’t get it.