The Fed's Problem With the Job Market

[mahatmakanejeeves]

While Fed officials worry that rising wages will lock the economy into a high-inflation regime, how great is the risk of that happening?

wsj.com
The Fed’s Problem With the Job Market
Federal Reserve officials worry that rising wages will lock the economy into a high-inflation regime. But how great is the risk of that happening?

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[ProudMNDemocrat]

1. Raising borrowing rates does not curb inflation. It makes it worse.

Even when there is inflation, people are still buying things like consumer goods, homes, and using Credit Cards to do it. The Fed raising borrowing rates means that consumers have to make the difference so Banks can make more money.

Drop the rates back by half what it is currently. Consumers will feel it immediately. Banks will still make money.That will surely affect Supply as demand increases. Perhaps manufacturing more in the US will ease the supply issue. Like with the Micro Chips needed for so many consumer goods like Cars, computers and Electronics, home appliances, etc.

Just a thought.

[Bernardo de La Paz]

3. Nope

1. Raising interest rates has curbed inflation successfully in the past.

2. Dropping interest rates increases Demand, as you say, but then Supply has to catch up. While it is catching up, inflation rises more.

3. Increased economic activity creates more Demand. More inflation.



What is happening now is the same as if you stomped on a hose running water. Covid was the stomp. It sent a shockwave running back to the tap. That reflects back to the outlet of the hose.

The economy has had a big shock with Covid and the huge fiscal stimulus. Waves are booming back and forth as the economy adjusts and readjusts. But the waves do damp out after a while.

Higher interests rates are a damper, like putting fingers on vibrating strings to quiet them.

[Bernardo de La Paz]

4. The Fed raising interest rates increases the cost of money to banks, so they raise their rates

The Federal Reserve does NOT issue an edict telling the banks to raise their rates.

Consumers do NOT "make the difference".

I think a little more study of the basics would be beneficial.

[jmbar2]

2. From what I'm seeing...

As a part-time retirement job seeker, the job search process appears to be seriously broken. This causes me to doubt a lot of government labor market analysis.

I think there is much less of a labor market shortage, than
- extreme barriers to getting to the interview and hiring stage, and
- little to no tolerance among young people for shitty jobs or demeaning working conditions.

I follow a couple of Reddit threads regularly where workers and job seekers document their experiences.

When I was looking for full-time professional work in the past, you could expect to submit a lot of applications to get one interview. In these forums, I am seeing early career job seekers talking about submitting over 1000 online applications, going through multiple panel interviews, having to provide a free work sample, and pass sketchy personality tests, only to get ghosted at the hiring stage. They are extremely discouraged and angry about it.

I didn't expect my part-time retirement job search to be so difficult, but then I am also leery of Covid right now, so looking for isolated jobs. But I cannot remember a time when it was SO hard to get a call back from an employer.

[anti stupid]

5. lets remember what republicans want

Rising wages? Republicans hate increasing wages. Why? not because it fuels inflation but because it threatens corporate profits. Wages (particularly for the working class) have not kept up with inflation in decades. But what has kept up with and surpassed inflation? ....PROFITS. So when you hear Some Republican complaining about wages contributing to inflation point out the record profits corporations are reaping and call their claims what they are...corporate greed. WAGES SHOULD BE GOING UP AND ITS PAST DUE. Oh and why do Republicans and Corporations hate and fight Unions.....Reread above.

[doc03]

6. I have noticed in the last month that the shortage of workers has

become worse. The fast-food places are closing their indoor dining areas again like they were last year.
The sit-down restaurants are also working shorthanded, I know of a couple that have closed off part of their
dining area because of the labor shortage. The stores all have help wanted signs and complain they can't get workers.
The Fed wants to slow the economy so there is no labor shortage and therefore keep wages down. I have been around
a long time I have never seen an economy like this where you have 3.5% unemployment and 10 million jobs
that can't be filled.

[bucolic_frolic]

7. Rising prices are about testing what the market will bear and maintaining corporate profits. /nt

[Warpy]

8. Are they really that pig ignorant?

That's a rhetorical question, of course they are.

The truth is that wages have been depressed for a very long time, mostly as a function of demographics that had 10 Boomers applying for every decent job and the ignorance of rich men who didn't want to pay labor costs cutting their own throats as demand dried up.

In addition, wages are a lagging indicator, reflecting inflation rather than causing it. Surely those jokers know that, at least.

I suppose they're terrified better paid workers will lock in this last inflationary spike. While that will be true in the short term, competition will overtake the lust for profiteering as the main corporate motivation.

America has needed a raise, a big one, for decades. The cloistered twits at the Fed need to know this and that starving labor has not ended inflation, it has continued every single year no matter what wages have done.

[Xoan]

9. Quadruple redundancy ...

wow.