The U.S. labor market is somehow unflinchingly resilient, however it might lead to the tension of the most recent economy. Wall Street investors are now meddling with their version of Hell Week. It is labor market data that could impact market swings volatility. On many occasions, the Federal Reserve had believed that the rise of inflation remains sticky until the pace of wages increases. In other words, it actually means that the Fed’s rate hikes are already a burden, yet it continues until the job market is heating up.
In a year, the Federal Reserve increased the rate of interest from zero to around 4.5% to 4.75%. This was an attempt to cool the economy. However, job numbers have escalated above the expectations in these 10 months. Thus, the labor market is getting stronger than ever. Based on the data, the U.S. added a surprisingly 517.000 jobs in January. It has beaten up the unemployment rate since 1969 which was the lowest.
Although there are massive layoffs at big firms like Google, Facebook, Goldman Sachs, Twitter etc, job openings are higher than job seekers. The comparison is around 2 to 1. Mary Daly, the San Francisco Fed President delivered this concern at Princeton University. She argued that in order to put high inflation behind, policy tightening for a longer time would be necessary. She added that the substantial pickup in the share of working-age adults, immigration flows and unemployment would decline. It pushes up wages and prices making it hell week. But at least it would almost be in the medium term.
Christopher Waller, the Fed Governor also delivered his ideas on the recent situation. He said that based on the data, customer spending is not decreasing that much. Plus the labor market continues to rise. So, inflation is not coming down as expected.
