With 263,000 new jobs created in the U.S. economy in September, job growth increased consistently. As a result of firms continuing to hire, the unemployment rate decreased to 3.5% from 3.7%.
Although the job market is still tight, there are indications that it is loosening. Since the economy added 315,000 jobs in August, fewer people are being hired by companies. However, the strong job market might have negative effects on Federal Reserve policy and, consequently, on the rest of us.
I am aware of your thoughts. Why might a healthy job market be unfavorable?
High employment rates may not necessarily be negative for the economy; otherwise, the Fed is attempting to control inflation, and in fact, to do so, the economy must be slowed down. And a weakened employment market is one (sad) impact of applying the breaks to the economy. which the central bank at this time desires.
There are more open positions than there are workers to fill them in a tight labor market, which makes employment more challenging and can increase the minimum wage at the expense of inflation. A weaker labor market, where there are more workers than jobs, contributes to lower inflation, which eases the strain on many American families’ finances.
The labor market is still doing well, despite the Fed’s commitment to fighting inflation and the effect some of its policies are having. So, what can you forecast coming next? A solid job market indicates that the Fed will continue to raise rates aggressively, which sent the market crashing at the news. Therefore, even if you don’t invest, you will still be affected.
As borrowing money becomes more expensive, you’ll also feel the pinch of increasing interest rates if you want to buy a house, or a car, need a loan, or have credit card debt. Not to mention, the likelihood of a recession increases when interest rates rise. But if we want the rate of inflation to decline, we must all put up with it as a positive good.Share to Help