And the market hates it… This used to be the kind of thing that would send the market soaring, but now it’s a sign that the fed won’t be satisfied with how much they have already damaged the economy… im starting to wonder if fighting inflation is worth tanking all other aspects of the economy, and the fed has already said their goal is to make more people unemployed and break the housing market, in addition to hurting corporations, consumer demand, the stock market… https://www.cnbc.com/2022/10/06/stock-market-futures-open-to-close-news.html
If you look back in the last 60 to 70 years, every time unemployment peaks (in a good way) like this, it's always immediately followed by a recession. This is about as good as it gets with unemployment and the market knows that. Couple it with the Fed Reserve stomping on the brake pedal and yeah, the market is reacting accordingly.
Apparently you are independently wealthy and never have to work again with that $1200, according to the geniuses in the GOP.
Federal Reserve has killed and continues to evaporate all liquidity in the market. Investors well know what a lack of liquidity leads to and are already feeling it. Even strong consumer spending, wages and employment can't defeat a market void of liquidity. Equities are always the first to get crushed. Then within 6 to 12 months, companies begin laying off. People talking of a "soft landing" are the same people who said inflation was "transitory".
I’ll bite. Something isn’t right. Can u explain it to me? GDP in decline, inflation can’t be stopped, and don’t look at the Dow.
And therein lies the problem. Tight labor market continues to result in wage inflation. As a business owner, I see this first hand. Having to increase my prices to my customers accordingly. Until UE goes back up, inflation will persist even if COGS remains in check.
Funny because last report that came out, the participation rate was at its highest since before the pandemic. This new one dropped ever so slightly. Since the middle of 2020, it's gone up a full percent to now and sits about a percent shy of what it was Jan 2020. It's only about a half percent short of what it was in the middle of 2019. What do you think the rate should be at?
Yeah ... it's amazing that employment is at the lowest point it's even been at since the 1960s ... and the right wing brain trust is like "this is bad, people just don't want to work". LOL.
Yeah, and that was almost 2 years ago, so that works out to about $2 a day. I guess that replaces a job.
We have a structural/demographic labor shortage. Partly caused by demographics (a generally aging boomer population). Partly caused by COVID (deaths, people leaving labor force early). Partly caused by destructive immigration policy of the last admin (less than normal immigration = less legally eligible workers entering labor force). Wage labor inflation is only half the puzzle though, it’s something like 5%. I think we’d be dealing with that 5% pretty well if it were all about wage inflation. Unfortunately we got hit with some crazy supply related stuff which has added another layer to it, pushing the total over 8% and meaning despite that high wage inflation, real wages have been negative (and not by a small amount, a full 3% in the negative). The China lockdowns (supply chain) seems to be abating, Russia’s actions still messing with some commodities markets which is totally out of our control. Unfortunately the feds only real move is to raise rates and try to slow demand by intentionally stalling the economy. By all accounts, these low wage service industry companies are having difficulty finding workers. By definition, if McD can barely hire workers at $15/hr and is having trouble finding enough, then the employees they do have must be worth that $15/hr. They might even give you a chance! If not, then there are some Venezuelans i know of who would likely be eternally grateful for the chance to work at McDonalds.
The fed actually wants companies laying off workers, probably wants to see employment tick off these record highs and back to a more neutral 4% or 4.5% U-3. That’s why the market took this good/strong jobs report as bad news. They think it means more future rate hikes by the fed, that the fed has more “work” to do to slow the economy and slow hiring. When the risk free rate of return is higher, it generally causes stocks and risk assets to be price adjusted lower, especially those who may now see more realistic borrowing costs going forward. A lot of these valuations were priced for ZIRP.
You are preaching to the choir. The Fed wants 4 to 5 percent unemployment, but they’ll likely get 7 to 8 percent or worse in the end. You don’t raise rates this quickly and not feel some real pain from it. The piper must be paid. And the Fed is perfectly ok with 7 to 8 percent unemployment if it means avoiding endemic inflation.
