First Sign – Labor Market 📈

First Sign – Labor Market 

One of the indicators causing the massive hike in interest rates is the strength of the labor market. The unique part about today’s economic problem is that while inflation is extremely high, unemployment is extremely low, placing the Fed in a pickle. When they are raising interest rates, one of the things they are looking for is a cooldown in the labor market, which is displayed by job openings and unemployment numbers.

Fortunately, we received some important data regarding the labor market in August, placing something on our canvas to work with. Job openings fell by 10 percent from 11.2 million jobs to 10.1 million jobs, the greatest decline since the early stages of the pandemic. Retail and healthcare were the two industries that had the greatest decrease in openings, and this is partly due to corporate policies. It still exceeds the 6 million unemployed workers in the United States, but the data displays a clear cooldown that might be correlated with the rate hikes. Company layoffs have started to become a trend in the past few months, with big banks like Goldman Sachs along with other tech businesses laying off parts of their workforce in order to help alleviate pressures. The Fed now believes they can avoid the stage of outright layoffs while fending off inflation, but they do recognize the battle is far from over.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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