After several months of secure employment, employers in the US in May were able to move slightly to a level that would still be in line with a healthy labor market, despite high inflation and rising loan prices.
WASHINGTON (AP) – After months of reliable employment, U.S. employers in May may have fallen slightly to a level that would still be in line with a healthy labor market despite high inflation and rising loan prices.
According to estimates by data provider FactSet, last month economists estimated that 325,000 jobs were created in the country last month, compared to 428,000 in March and April. If so, it will break a record streak of 12 consecutive months when job growth exceeded 400,000 people. Unemployment is expected to fall from 3.6% to 3.5%, a half-century low.
The government’s May job release, released on Friday, coincides with inflation close to a four-decade high, and worries about higher loan rates and a potential recession that is shaking the stock market. But employers generally remain optimistic. Consumers continue their spending despite growing concerns about rising prices.
Average wages are rising. And households, especially high-income ones, have amassed unusually large savings, in part through government aid payments since the pandemic recession began.
In April, according to the government, there were 11.4 million vacancies – an average of almost two for every unemployed person, slightly below the record set in March.
“It was pretty amazing how long it was,” said Don Faye, senior district president of recruitment firm Robert Half.
Despite this, another tough month of recruitment is unlikely to help Democrat lawmakers facing the prospect of losing seats in Congress this fall, with chronically high inflation worrying voters. Ratings of President Joe Biden’s approval fell, even as unemployment fell.
American politics has entered an unusual period when jobs and wages, which have long been the most influential economic indicators for everyday voters, have receded into the background before inflation.
On Thursday, the national average per gallon of gas reached $ 4.72, a record high before adjusting for inflation, up 13% from a month ago. Europe’s decision to embargo most Russian oil is likely to lead to even higher gas prices in the coming months, which Americans will feel if more of them hit the roads this summer.
This week, to show that he acknowledges the pain caused by inflation, Biden met with Federal Reserve Chairman Jerome Powell. The two men discussed strategies to try to reduce inflation, which jumped 8.3% from last year. Biden released oil from government stocks to try to curb gas prices, and sought to improve port performance while having little effect on consumer prices.
The president said he would “respect the Fed’s independence” as Powell pursues interest rate hikes that aim to cool spending and slow inflation, but could also weaken the economy and labor market.
At the moment, a strong labor market itself is fueling inflationary pressures. Many workers are enjoying almost unprecedented power in negotiations in an economy in which businesses still cannot fill all their jobs.
The number of people who resigned, usually for the best positions with higher pay, was at a record high or close to it at a record high for six months. Companies typically pass on to consumers at least part of their increased labor costs by charging more.
American workers generally enjoy extraordinary job security, with layoffs at almost the lowest level in two decades. The number of people receiving unemployment benefits has fallen to its lowest level in more than 50 years.
However, there is growing concern among investors and some economists about how long growth may last. According to most indicators, inflation-adjusted incomes are falling, thus eroding the solvency of Americans. Eventually, this trend will weigh on the economy, although it is unclear if this could happen. Most economists expect consumer spending to stay healthy this year.
Another headwind for the economy is the rapid rise in Fed rates, which should become the fastest in more than 30 years. The Fed raised its short-term rate last month by half a point, the biggest increase since 2000, to a range of 0.75% to 1%.
This month and in July, two additional rates are expected to be halved. And some Fed officials have suggested in recent speeches that if inflation shows no signs of slowing, they could make another half-point increase in September.
The Fed’s moves have already sharply raised mortgage rates and contributed to a sharp drop in sales of new and existing homes. Rising rates have also led to increased borrowing costs for businesses that may respond by reducing their investment in new buildings and equipment, slowing growth in the process.
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