The employment market is being attempted to be stopped by the Federal Reserve, but to this point, it has been like trying to stop a fast freight train; although it may be slowing down, there is still a lot of momentum.
According to data released on Friday by the Bureau of Labor Statistics, the unemployment rate decreased to 3.5% in September from 3.7% in August as businesses continued to hire, creating 263,000 new positions. The figure below illustrates how low that level is by historical standards. It was last observed before the pandemic; before that, it had not been seen since 1969.
The Employment Market Is Still Interesting, Man
Before 2020, the unemployment rate hadn’t been this low since 1969 (3.5% in September), and it was hovering close to that level. (To see a specific data point, tap or hover over that area of the chart.)
The fact that some analysts and stock market speculators perceived the reduction in unemployment to equal 50-year lows as bad news—which caused stocks to drop on Friday morning—is evidence of the nation’s perplexing economic position. That’s because continuous hiring indicates that the Federal Reserve will probably keep up its campaign of swift interest rate increases designed to stifle inflation and slow the economy by bringing supply and demand into balance. However, by making it excessively difficult to borrow money and significantly slowing down corporate activity, the such method runs the risk of sparking a recession.
Although the idea of slowing the escalating price rises for basics of life may be welcomed by households, the price relief will probably come at the expense of reduced salaries, more difficulties finding employment, and maybe millions of layoffs. With such a low unemployment rate, central bank officials contend that the labor market is “out of balance” due to workers’ excessive power and that pay increases are fueling inflation.Share to Help