A deeper look into the May jobs report released on Friday uncovers several unsettling “red flags,” as described by former White House economist Tyler Goodspeed. While the overall job numbers might initially appear encouraging, there’s more to this story, deserving a deeper examination and understanding.
On the surface, the U.S. job market demonstrated considerable resilience as employers added 339,000 jobs in May. Nevertheless, Goodspeed, now a Kleinheinz Fellow at the Hoover Institution at Stanford University, highlighted the potential concern of a “softening labor market.”
Against the backdrop of inflation concerns, many Americans are taking on multiple jobs to counter the eroding value of their income. Peter Schiff, a chief economist and global strategist at Euro Pacific Capital, noted, “A lot of people that already have a job, and are having to take extra jobs to make up for the income that they’ve lost on those jobs.”
On the heels of the May jobs report, economists weighed in on what the unexpected surge in jobs really means for the U.S. economy. https://t.co/x8rjYIUH2i
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While wage inflation is drawing in workers, it simultaneously complicates the Federal Reserve’s task of taming inflation back to a manageable 2%. The report’s implication for inflation might be its most distressing element.
Meanwhile, rumors indicate that the Federal Reserve may “skip” a rate hike in June, contrary to what most analysts anticipated. The Federal Reserve purportedly opts for a “skipped hike” rather than a “pause,” indicating the intention to continue the rate hike regimen soon.
Two Federal Reserve governors have supported skipping a rate hike, a potential persuasion strategy aimed at more hawkish members. Despite what could be seen as indecision or concern, the Fed maintains a strong public-facing facade, hoping to inspire confidence from the public and the market in its approach.
Goodspeed stated that the Federal Reserve might have increased confidence in the labor market, consequently shifting focus to its mandate of curbing inflation. He suggested that wage inflation sets a floor for inflation, potentially tightening monetary policy.
Schiff continues to express strong concerns about Fed policies, which he claims have only led to increased debt, weakened the economy, and escalated inflation. In addition, he pointed out the quality of jobs created during the Biden presidency, typically low-paying service-sector jobs, as an issue.
The Fed and the Biden administration are navigating treacherous economic waters. Americans are justifiably concerned about their jobs, wages, and the price of goods. Unfortunately, the May jobs report and the Federal Reserve’s possible “skipped hike” appear set to do little to ease tensions.
