Unemployment falls back to its lowest level in decades…3.5%

My beef with the rising rates stems from the reason we are doing it in the first place. The Fed caused the inflation we're seeing today. Now they are playing catch-up, raising rates extremely fast and at unprecedented clips. This didn't have to happen though. If they hadn't caused the bubble with all the QE during Covid, we wouldn't be here. Worst case is we'd be seeing quarter-point increases once every 2 or 3 months, which is much easier for the economy to absorb.

But at the same time, the Fed is in a spot now where they have to do it this way, because endemic inflation will have a lot larger toll on the economy in the long run than 3.5% of the workforce losing their jobs in the short term. The Fed doesn't want a repeat of the late 70s, where inflation remains rampant for years on end. The problems just multiply the longer inflation runs. Nothing is more catabolic to a growing economy than endemic inflation. 3.5% of workers losing their job is more a function of the Fed being irresponsible with their easy money policy during Covid and having to overcorrect to compensate. They now have no choice but to keep hiking until inflation and inflationary pressures are completely rooted out. We went decades without a serious inflation problem. The Fed's job is a lot easier if inflation remains subdued.

 

I don’t think that, I know it was happening. I loved it. We had over over a dozen do it in early 2021, and that’s only the ones that were honest enough to admit it. And we didn’t lay anyone off so the additional unemployment wasn’t even a factor. A good friend of mine owns a prominent restaurant here in Orlando and he had a heck of a time getting people to come back to work. They were making $900 week sitting home. Several of ours have come back over the last few months and one more will start back next week. Hard to argue with the logic, but it certainly wasn’t good for the economy.

 

No argument from me. Between the cheap money and the government handouts it was a disaster waiting to happen, and now it is.