What to do with the looming recession in a strong labor market

For more information on storm clouds, see. This report From Nicole Goodkind of CNN Business, it’s usually about the lack of consumer demand that can lead to a recession.

Covid-19 turned it over. Supply chain problems caused by pandemics and wars in Ukraine are now causing inflation. Demand may continue to decline as government spending (for example, child tax credits expire) declines.

At the same time, the Federal Reserve’s answer to inflation (rising interest rates) will hurt demand. Mortgage rates are almost double this time last year, and less money will flow into the economy.

Next is the stock market. This seemed to be cut off from reality for years, and even during a pandemic, but it’s now very bumpy and helps to reduce American confidence in the economy. ..

Next is the employment market, which has not received notes about storm clouds and the possibility of a recession.Data from Government report US employers were still desperate to hire people in May, as announced Wednesday. According to the Bureau of Labor Statistics, there were 11.3 million jobs. In addition, about 4.3 million Americans resigned or changed jobs in May, indicating that workers were comfortable moving around and had very few layoffs.
CNN’s Anneken Tappe last month American companies are currently ignoring recession warnings to continue employment. She wrote:

The general definition of a recession requires a two-quarter decline in GDP, which seems unpleasantly close to the United States.

However, some economists quickly point out that one of the common features of the recession is the lack of a mix. That is, the labor market remains strong.

what happened?

What are these mixed messages? What should I do with all of this? I spoke to Elise Gould, senior economist at the Institute for Economic Policy and co-author of the State of Working America, about all this.

Some of the important points she mentioned are:

Is this a turning point in the employment market?

Jobs and employment reports said, “We seem to suggest that we still have a fairly strong economy, but that may be a sign of a chill.”

She argued that wage growth could be “easing or slowing”.

“I think that’s a trend that gets noticed. Is there a little turning point here?” She said.

Large-scale remodeling, not mass retirement

Workers who continue to quit such a large number of jobs do not necessarily retire or leave the workforce, according to Gould. “Many of those who quit actually quit and found other jobs in almost the same sector, so they might quit one restaurant job and take on another. They’re completely out of the workforce. I’m not. “

Correcting inflation will probably hurt the job market

When asked how the Fed’s rate hike plans would affect workers, she said it could hurt, when she asked Gould, who specializes in wages and labor. It can reduce spending on the economy and lead to higher unemployment.

“You’re basically causing some pain and suffering in the name of fighting inflation, and that’s a really tricky calculation,” Gould said, especially the current inflation, not from the labor market, Covid- 19 supply chain roars and Russia’s invasion of Ukraine because it comes from external forces such as.

Keep an eye out for growth in nominal wages

Mr Gould said he is keeping an eye on wage growth to measure the strength of the job market. Looking at this May compared to last May, she said, suggests strength. But lately things are slowing down.

“If you look from one month to the next, or from one quarter to the previous quarter, the slowdown is much more pronounced,” Gould said.

I don’t know how to explain exactly what’s going on

She was hesitant when she asked Gould to evaluate the economy. The pandemic recovery has some powerful aspects, but it’s not clear what will happen next.

“What are the adjectives that accompany it?” She wondered. “Is it temporary? Will this last long? Will we turn around now?”

She was concerned that the extreme actions of the Federal Reserve to curb inflation could hinder workers’ progress.

Other reasons why the employment market may not be as strong as it looks

Gould is looking for potential turning points in the employment market, but there are some signs that strong numbers may be hiding some problems in the labor market.

Beth Ann Bovino, Chief Economist at S & P Global Ratings, wrote: CNN Business Outlook In June, women did not return to the workforce as men followed the pandemic. She also said that wages have risen, but not as fast as inflation, which means that salaries have actually shrunk.
For more information on wages and inflation, see Tami Luhby and Tal Yellin on CNN. compare..

If the Federal Reserve’s plans to raise interest rates raise unemployment and slow employment, Bobino argued that “the’healing’of the U.S. economy and employment market could be worse than the disease.” ..

Source: www.cnn.com

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