7 ms·

US adds a solid 253,000 jobs despite Fed's rate hikes

43 points by fnordpiglet 4y ago

fauxpause_ 4y ago
> The central bank has expressed concern that a robust job market exerts upward pressure on wages — and prices. This seems like a bad statement to make without any comment on what’s happening to wages. Are wages rising?
- NickC25 4y ago
  Wages don't rise. Rising wages means the wealthy can't exert as much control on the government and the economy as they'd like. Look at a long term chart for wages on a 20,30,40,50 year scale. Wages have not kept up with productivity, and this is by design.
  - fnordpiglet 4y ago
    The theory is if wages go up inflation must. But this assumes there isn’t excess production capacity. If supply is elastic then demand increasing makes supply increase, which creates investment and expansion, leading to a virtuous cycle. Parallel to the story here is that supply chains have normalized to about 2019 levels of backlog. We aren’t seeing mass production stoppage due to outbreaks. We have an enormously elastic just in time economy so long as the parts are functioning - and they are. The fed is managing things with a playbook from 45+ years ago. It’s not been updated for the modern globalized just in time economy with enormous ability to scale to almost any amount of demand. It’s not the 1970’s, which is the last time we tried to manage inflation. But the Fed still dances to disco and wears bell bottoms, so they must strangle wage growth and full employment to make sure people save 5% on a bag of Doritos.
    - NickC25 4y ago
      But that theory is false because there are plenty of other inherent inflationary powers at play, such as the fact that there are 2 people whose combined net worth (Musk and Bezos) is nearly a trillion dollars....and they are barely taxed relative to the amount of economic power they wield. A one-time "this is your fee for us allowing you to exist and your business to thrive despite you putting a ton of burden on tax payers through tax credit abuse, creative accounting, lobbying, etc..." tax for the 10-20 wealthiest people (or families) would be one of the most deflationary events in the history of this country. You take 30% of Bezos' net worth away and he'd still have enough to buy the entire NFL....which would probably increase his net worth (and still have a few billion to screw around with). Take 30% of the Walton's collective net worth away and they wouldn't blink an eye. Take 30% of Musk's net worth away and he could still afford to piss away 20, 30, 40, 50 billion on some vanity project and still be one of the top 10 wealthiest people on the planet. Such a tax would be the biggest shot in the arm to the US (and world) economy in a very long time. It would also be extremely deflationary because it would spike the M2 Velocity chart to unseen highs, which is generally an indicator of middle and lower class economic activity. It's insane that we have people that are worth hundreds of billions of dollars and we don't tell them "we created this system that allowed you to attain astronomical wealth, and we maintain that system....you should consider that when it comes to tax season, rather than hiring an army of lawyers to avoid paying tax". THEY are the cause of inflation, because there's absolutely fuck all reason to just hoard billions when we have inflation and massive income inequality.
      - fnordpiglet 4y ago
        Holding aside the other points, them holding wealth of immense size is anti-inflationary because they’re holding their wealth and not spending it. If you released their wealth into the economy overall to be freely spent on Doritos by everyone, that would cause inflation. One reason raising interest rates decreases inflation is it causes more savings (to collect interest) and less leveraged spending (to decrease debt and interest payments). The wealthy tend to retain their wealth as savings regardless of interest rates simply because they can’t possibly spend it all that fast.
        NickC25 4y ago
        This is where the M2 Velocity chart again comes into play. Taxing the uber-wealthy is actually deflationary, not inflationary. Taking away their ability to hoard unimaginable amounts of money actually helps the economy tremendously. The money that sat around in Jeff's or Elon's bank account doing nothing but accruing interest actually flows back into the economy, reducing the need government's need to print more money. How, and why? People still need money, the economy still needs money, the business cycle and the real world still need to continue. Even if one person takes an outsized percentage the money supply, the underlying conditions that allows everyone else to participate in the overall economy remain unchanged except for one critical point. The only change is that because one person has so much money that they've effectively skewed the velocity of an average (currency of your choice), the government has no choice but to step in and print more money.
- deleted 4y ago
  [deleted]
- MuffinFlavored 4y ago
  > This seems like a bad statement to make without any comment on what’s happening to wages. Are wages rising? This might be in reference to during the pandemic, nobody really wanted to work (labor shortage), so employers had to offer incentives and above-average (for them) wages in order to entice people to work. I know in some minds we might think "good, higher wages for entry level workers" The only problem is, as you know, that money has to come from somewhere. Cut a cost somewhere, raise a price to a customer somewhere, or the owners make less money. The third one doesn't really happen/isn't worth the risk of owning a business at that point, right?
- medellin 4y ago
  For the bottom they are. For the middle class no movement. For tech im seeing them go down at most startups.
- vngzs 4y ago
  You seem to misunderstand the statement. "Upward pressure on wages" implies an increase in wages. In other words, people make more money in robust job markets and can spend more money on goods and services.
  - fauxpause_ 4y ago
    Theoretically, yes. But is that what is happening in practice?
- adam_arthur 4y ago
  Yes, wage gains have been averaging 6% or so for the past two years. Obviously in the longer run inflation will be correlated with nominal purchasing power of consumers https://www.atlantafed.org/chcs/wage-growth-tracker https://www.atlantafed.org/chcs/wage-growth-tracker
A4ET8a8uTh0 4y ago
It is very interesting all things considered. I am personally mildly concerned about the coming years for a variety of reasons, but I have to admit that I am a little surprised that all the talks about recession, inflation and layoffs only seemed to make people buy more tangible goods to hold on to. I am still trying to make some sense of all this. One could argue that several recessions should have already happened ( and recent bank collapse was a signal of one such event ), but were merely held back by government rescue/bailout ( depending on your perception of things ). edit: Oh yeah, and old guard trying reintroduce working in office by decree. It all does not really add up.
- AuthorizedCust 4y ago
  Or perhaps we have less understanding of what makes the economy buzz than we think?
  - NickC25 4y ago
    This ^^ Economics is a pseudoscience, after all. In fact, it's probably just an extension of psychology. Nobody really knows what makes the economy tick, but one thing that can somewhat measure the economy's general strength is the M2 Velocity chart. If the velocity of money is high, it means lots of different people are out spending money and keeping money in quick circulation as opposed to hoarding it.
    - dragonwriter 4y ago
      > In fact, it's probably just an extension of psychology. This is true to the extent (and only to the extent) that behaviorism eventually managed to poke a little bit into economics, which had been dominated by the ivory tower rational actor model detached from empiricism before and longer than any of the other social sciences.
  - ajross 4y ago
    Or we have more? I hate to be That Guy, but all the apocalyptic nonsense about inflation and debt and crypto and spending and fiat currency and pestilence and whatever has been almost exclusively propagated via too-online echo chambers like the one right here on HN. There are Serious People out there too, real economists who have been studying this stuff for whole careers. And quite frankly they haven't been saying any of this stuff. I think it's great that people (especially the GP) seem willing to reevaluate their priors. But maybe while you do that you could nod to the expertise of those "elites" you've been trying to ignore?
Waterluvian 4y ago
Here's a fun trick: If your KPI is "number of jobs" then keep the minimum wage so low that countless people need two or three of them.
- fauxpause_ 4y ago
  The fed is trying to raise unemployment, not lower it, and the real metric tracked is the unemployment rate, which is not affected by your comment.
  - kortilla 4y ago
    No, the fed has a dual mandate of controlling inflation and keeping unemployment low. They are absolutely not “trying to raise unemployment”. They are trying to control inflation and the expectation is that they will eventually have to stop raising interest rates (or lower them) because unemployment increases too much before they hit their inflation target.
    - fauxpause_ 4y ago
      Yes they are. They’re very clear about this. They are trying to raise unemployment as a lever to reduce inflation. That is not to say they want unemployment to rise indefinitely, but they do want it to rise.
      - kortilla 4y ago
        No they are not, they are very clear about this. They will keep raising interest rates until inflation hits their target. They will only stop before that if it starts to drastically impact employment.
      - reducesuffering 4y ago
        Fed mandate is clear: Price stability and low unemployment. Their main lever is interest rates. Interest rate increases do not necessarily increase unemployment. Now that unemployment is low enough, their priority is inflation, and for that they will raise interest rates. If higher unemployment is a side effect that leads to 2% inflation, then their mandate is still achieved. But rest assured, if inflation comes down to 2% with unemployment flat or improved, it's all the better according to them. Their intention is not "more unemployment -> less inflation", it's just "less inflation," by any means necessary. They will accept causing higher unemployment to achieve 2% inflation because it's a balancing act between their two goals. "Powell said he hoped that a slackening of demand might reduce pressure in the labor market without raising unemployment."[0] [0]https://www.bloomberg.com/opinion/articles/2022-07-29/higher-unemployment-is-coming-and-the-fed-should-get-ready?leadSource=uverify%20wall https://www.bloomberg.com/opinion/articles/2022-07-29/higher...
ineedasername 4y ago
It seems like (AFAIK) the only major sector cooling off for jobs is tech (and I’m guessing finance/banking, temporarily). Interest rates seem most directly tied to easy/hard money, but in the current economy that doesn’t appear to have the same secondary correlation to workforce demand that might usually have been common in the past. However I should note that the linked article doesn’t give a ton of detail on the sector & quality (pay scale) of jobs where there is growth, and that is a big consideration. Shrinking inventory of high paying (tech) jobs would be harder to makeup for if the increases are coming from lower paying $40k-$50k/year jobs.
- jjoonathan 4y ago
  The link between interest rates and investment seems pretty sound, I think it's more likely that we are just seeing a secular trend of retail still recovering from covid or something.
  - lamontcg 4y ago
    There's a lot of lags in the system as well. Like another comment mentioned housing starts have fallen off, but there's still work on ones already being built. The bad businesses/investments that have been propped up by zero interest rate financing also will need to hit their loan maturity dates for them to adjust upwards. It is normally 6-12 months after the Fed stops raising rates that there's a recession. And the big recovery from covid right now is hospitality.
- duxup 4y ago
  >the only major sector cooling off for jobs is tech Is that happening overall? I know some high profile tech companies have done large layoffs but I suspect most of tech is not them.
  - darkwizard42 4y ago
    https://layoffs.fyi/ https://layoffs.fyi/ Based on this, almost 200K tech workers out in 2023 alone with additional 160K gone in 2022. That is a lot of jobs. I'll caveat with saying these are not all in the US and that as a % of the total workforce, tech is not that large so impact on this unemployment number is low. Just pointing out the tech sector is by the numbers/facts available definitely cooling.
electriclove 4y ago
What about the downward revisions for February and March? https://www.zerohedge.com/markets/april-payrolls-smash-expectations-after-huge-downward-revisions-unemployment-blacks-hits https://www.zerohedge.com/markets/april-payrolls-smash-expec...
photochemsyn 4y ago
This statistic is pretty meaningless without knowing the wage/salary rate for those jobs, and the number of hours. [edit: US govt maintains wage data and it should be simple to characterize the average & median values for compensation for the 'new jobs created': https://www.bls.gov/oes/current/oes_nat.htm https://www.bls.gov/oes/current/oes_nat.htm ] Also, > "But the jobless rate fell in part because 43,000 people left the labor force, the first drop since November, and were no longer counted as unemployed." What kind of nonsense statistic is an unemployment rate that doesn't count this fraction? It's not like those people still don't need a place to live and food to eat even if they can't find a job after six months of looking. Finally, >"The central bank has expressed concern that a robust job market exerts upward pressure on wages — and prices." Translation: workers get a larger fraction of the profits created by their labor if job markets are tight, putting downward pressure on executive bonuses and shareholder dividends, and we can't have that! Everything must go to the rich, since the most important measure of societal success is the billionaire count.
- varelse 4y ago
  [dead]
- mschuster91 4y ago
  > What kind of nonsense statistic is an unemployment rate that doesn't count this fraction? It's not like those people still don't need a place to live and food to eat even if they can't find a job after six months of looking. "leave the labor force for good" can be legitimate - think someone on a longer sabbatical, going FIRE (financially independent / retire early), going to an extended stay in prison or becoming a permanent stay-at-home parent.
- anovikov 4y ago
  People who left the labor force are simply those who no longer need work. FIRE people, women who got successfully married/successfully divorced, etc.
  - gtk40 4y ago
    > FIRE Or just expand to any retirees not just those who do it early.
curiousllama 4y ago
I wonder, to what degree are the drivers of inflation tied to Main Street trends (jobs numbers, consumption spending, etc) vs Wall St trends (asset bubbles, money supply, expectations, etc)? I recall in 2008 discussing this divide a lot. Finance recovered, but normal people never did. Whereas both sides used to be codependent, the stock market rose in ‘09 when folks still didn’t have jobs. I wonder if we’re bringing things back in line now. Inflation IS declining, the last MoM report notwithstanding, even as we’re adding net jobs. Perhaps I’m a bit optimistic. But could we finally be actually recovering from ‘08?
licnep 4y ago
Like Warren Mosler (founder of MMT) argues, you can think of rate hikes as basic income for the rich. Since the US Debt to GDP ratio is so high now, rate hikes are creating a higher deficit spending from the government into the economy (bondholders) which can be more than enough to counteract the contractive effect of rate hikes. https://fred.stlouisfed.org/series/MTSDS133FMS https://fred.stlouisfed.org/series/MTSDS133FMS
- deleted 4y ago
  [deleted]
- anonporridge 4y ago
  Can't you also think of rate cuts as basic income for the rich, because they tend to cause a rise in asset values as money searches for yield, and the rich own most of the assets AND rich people can take out very low interest loans backed by their assets rather than selling, which allows them to spend money without triggering a tax event?

43 points by fnordpiglet 4y ago

> The central bank has expressed concern that a robust job market exerts upward pressure on wages — and prices. This seems like a bad statement to make without any comment on what’s happening to wages. Are wages rising?

NickC25 4y ago
Wages don't rise. Rising wages means the wealthy can't exert as much control on the government and the economy as they'd like. Look at a long term chart for wages on a 20,30,40,50 year scale. Wages have not kept up with productivity, and this is by design.
- fnordpiglet 4y ago
  The theory is if wages go up inflation must. But this assumes there isn’t excess production capacity. If supply is elastic then demand increasing makes supply increase, which creates investment and expansion, leading to a virtuous cycle. Parallel to the story here is that supply chains have normalized to about 2019 levels of backlog. We aren’t seeing mass production stoppage due to outbreaks. We have an enormously elastic just in time economy so long as the parts are functioning - and they are. The fed is managing things with a playbook from 45+ years ago. It’s not been updated for the modern globalized just in time economy with enormous ability to scale to almost any amount of demand. It’s not the 1970’s, which is the last time we tried to manage inflation. But the Fed still dances to disco and wears bell bottoms, so they must strangle wage growth and full employment to make sure people save 5% on a bag of Doritos.
  - NickC25 4y ago
    But that theory is false because there are plenty of other inherent inflationary powers at play, such as the fact that there are 2 people whose combined net worth (Musk and Bezos) is nearly a trillion dollars....and they are barely taxed relative to the amount of economic power they wield. A one-time "this is your fee for us allowing you to exist and your business to thrive despite you putting a ton of burden on tax payers through tax credit abuse, creative accounting, lobbying, etc..." tax for the 10-20 wealthiest people (or families) would be one of the most deflationary events in the history of this country. You take 30% of Bezos' net worth away and he'd still have enough to buy the entire NFL....which would probably increase his net worth (and still have a few billion to screw around with). Take 30% of the Walton's collective net worth away and they wouldn't blink an eye. Take 30% of Musk's net worth away and he could still afford to piss away 20, 30, 40, 50 billion on some vanity project and still be one of the top 10 wealthiest people on the planet. Such a tax would be the biggest shot in the arm to the US (and world) economy in a very long time. It would also be extremely deflationary because it would spike the M2 Velocity chart to unseen highs, which is generally an indicator of middle and lower class economic activity. It's insane that we have people that are worth hundreds of billions of dollars and we don't tell them "we created this system that allowed you to attain astronomical wealth, and we maintain that system....you should consider that when it comes to tax season, rather than hiring an army of lawyers to avoid paying tax". THEY are the cause of inflation, because there's absolutely fuck all reason to just hoard billions when we have inflation and massive income inequality.
    - fnordpiglet 4y ago
      Holding aside the other points, them holding wealth of immense size is anti-inflationary because they’re holding their wealth and not spending it. If you released their wealth into the economy overall to be freely spent on Doritos by everyone, that would cause inflation. One reason raising interest rates decreases inflation is it causes more savings (to collect interest) and less leveraged spending (to decrease debt and interest payments). The wealthy tend to retain their wealth as savings regardless of interest rates simply because they can’t possibly spend it all that fast.
      - NickC25 4y ago
        This is where the M2 Velocity chart again comes into play. Taxing the uber-wealthy is actually deflationary, not inflationary. Taking away their ability to hoard unimaginable amounts of money actually helps the economy tremendously. The money that sat around in Jeff's or Elon's bank account doing nothing but accruing interest actually flows back into the economy, reducing the need government's need to print more money. How, and why? People still need money, the economy still needs money, the business cycle and the real world still need to continue. Even if one person takes an outsized percentage the money supply, the underlying conditions that allows everyone else to participate in the overall economy remain unchanged except for one critical point. The only change is that because one person has so much money that they've effectively skewed the velocity of an average (currency of your choice), the government has no choice but to step in and print more money.
deleted 4y ago
[deleted]
MuffinFlavored 4y ago
> This seems like a bad statement to make without any comment on what’s happening to wages. Are wages rising? This might be in reference to during the pandemic, nobody really wanted to work (labor shortage), so employers had to offer incentives and above-average (for them) wages in order to entice people to work. I know in some minds we might think "good, higher wages for entry level workers" The only problem is, as you know, that money has to come from somewhere. Cut a cost somewhere, raise a price to a customer somewhere, or the owners make less money. The third one doesn't really happen/isn't worth the risk of owning a business at that point, right?
medellin 4y ago
For the bottom they are. For the middle class no movement. For tech im seeing them go down at most startups.
vngzs 4y ago
You seem to misunderstand the statement. "Upward pressure on wages" implies an increase in wages. In other words, people make more money in robust job markets and can spend more money on goods and services.
- fauxpause_ 4y ago
  Theoretically, yes. But is that what is happening in practice?
adam_arthur 4y ago
Yes, wage gains have been averaging 6% or so for the past two years. Obviously in the longer run inflation will be correlated with nominal purchasing power of consumers https://www.atlantafed.org/chcs/wage-growth-tracker https://www.atlantafed.org/chcs/wage-growth-tracker

A4ET8a8uTh0 4y ago

It is very interesting all things considered. I am personally mildly concerned about the coming years for a variety of reasons, but I have to admit that I am a little surprised that all the talks about recession, inflation and layoffs only seemed to make people buy more tangible goods to hold on to. I am still trying to make some sense of all this. One could argue that several recessions should have already happened ( and recent bank collapse was a signal of one such event ), but were merely held back by government rescue/bailout ( depending on your perception of things ). edit: Oh yeah, and old guard trying reintroduce working in office by decree. It all does not really add up.

AuthorizedCust 4y ago
Or perhaps we have less understanding of what makes the economy buzz than we think?
- NickC25 4y ago
  This ^^ Economics is a pseudoscience, after all. In fact, it's probably just an extension of psychology. Nobody really knows what makes the economy tick, but one thing that can somewhat measure the economy's general strength is the M2 Velocity chart. If the velocity of money is high, it means lots of different people are out spending money and keeping money in quick circulation as opposed to hoarding it.
  - dragonwriter 4y ago
    > In fact, it's probably just an extension of psychology. This is true to the extent (and only to the extent) that behaviorism eventually managed to poke a little bit into economics, which had been dominated by the ivory tower rational actor model detached from empiricism before and longer than any of the other social sciences.
- ajross 4y ago
  Or we have more? I hate to be That Guy, but all the apocalyptic nonsense about inflation and debt and crypto and spending and fiat currency and pestilence and whatever has been almost exclusively propagated via too-online echo chambers like the one right here on HN. There are Serious People out there too, real economists who have been studying this stuff for whole careers. And quite frankly they haven't been saying any of this stuff. I think it's great that people (especially the GP) seem willing to reevaluate their priors. But maybe while you do that you could nod to the expertise of those "elites" you've been trying to ignore?

Waterluvian 4y ago

Here's a fun trick: If your KPI is "number of jobs" then keep the minimum wage so low that countless people need two or three of them.

fauxpause_ 4y ago
The fed is trying to raise unemployment, not lower it, and the real metric tracked is the unemployment rate, which is not affected by your comment.
- kortilla 4y ago
  No, the fed has a dual mandate of controlling inflation and keeping unemployment low. They are absolutely not “trying to raise unemployment”. They are trying to control inflation and the expectation is that they will eventually have to stop raising interest rates (or lower them) because unemployment increases too much before they hit their inflation target.
  - fauxpause_ 4y ago
    Yes they are. They’re very clear about this. They are trying to raise unemployment as a lever to reduce inflation. That is not to say they want unemployment to rise indefinitely, but they do want it to rise.
    - kortilla 4y ago
      No they are not, they are very clear about this. They will keep raising interest rates until inflation hits their target. They will only stop before that if it starts to drastically impact employment.
    - reducesuffering 4y ago
      Fed mandate is clear: Price stability and low unemployment. Their main lever is interest rates. Interest rate increases do not necessarily increase unemployment. Now that unemployment is low enough, their priority is inflation, and for that they will raise interest rates. If higher unemployment is a side effect that leads to 2% inflation, then their mandate is still achieved. But rest assured, if inflation comes down to 2% with unemployment flat or improved, it's all the better according to them. Their intention is not "more unemployment -> less inflation", it's just "less inflation," by any means necessary. They will accept causing higher unemployment to achieve 2% inflation because it's a balancing act between their two goals. "Powell said he hoped that a slackening of demand might reduce pressure in the labor market without raising unemployment."[0] [0]https://www.bloomberg.com/opinion/articles/2022-07-29/higher-unemployment-is-coming-and-the-fed-should-get-ready?leadSource=uverify%20wall https://www.bloomberg.com/opinion/articles/2022-07-29/higher...

ineedasername 4y ago

It seems like (AFAIK) the only major sector cooling off for jobs is tech (and I’m guessing finance/banking, temporarily). Interest rates seem most directly tied to easy/hard money, but in the current economy that doesn’t appear to have the same secondary correlation to workforce demand that might usually have been common in the past. However I should note that the linked article doesn’t give a ton of detail on the sector & quality (pay scale) of jobs where there is growth, and that is a big consideration. Shrinking inventory of high paying (tech) jobs would be harder to makeup for if the increases are coming from lower paying $40k-$50k/year jobs.

jjoonathan 4y ago
The link between interest rates and investment seems pretty sound, I think it's more likely that we are just seeing a secular trend of retail still recovering from covid or something.
- lamontcg 4y ago
  There's a lot of lags in the system as well. Like another comment mentioned housing starts have fallen off, but there's still work on ones already being built. The bad businesses/investments that have been propped up by zero interest rate financing also will need to hit their loan maturity dates for them to adjust upwards. It is normally 6-12 months after the Fed stops raising rates that there's a recession. And the big recovery from covid right now is hospitality.
duxup 4y ago
>the only major sector cooling off for jobs is tech Is that happening overall? I know some high profile tech companies have done large layoffs but I suspect most of tech is not them.
- darkwizard42 4y ago
  https://layoffs.fyi/ https://layoffs.fyi/ Based on this, almost 200K tech workers out in 2023 alone with additional 160K gone in 2022. That is a lot of jobs. I'll caveat with saying these are not all in the US and that as a % of the total workforce, tech is not that large so impact on this unemployment number is low. Just pointing out the tech sector is by the numbers/facts available definitely cooling.

electriclove 4y ago

What about the downward revisions for February and March? https://www.zerohedge.com/markets/april-payrolls-smash-expectations-after-huge-downward-revisions-unemployment-blacks-hits https://www.zerohedge.com/markets/april-payrolls-smash-expec...

photochemsyn 4y ago

This statistic is pretty meaningless without knowing the wage/salary rate for those jobs, and the number of hours. [edit: US govt maintains wage data and it should be simple to characterize the average & median values for compensation for the 'new jobs created': https://www.bls.gov/oes/current/oes_nat.htm https://www.bls.gov/oes/current/oes_nat.htm ] Also, > "But the jobless rate fell in part because 43,000 people left the labor force, the first drop since November, and were no longer counted as unemployed." What kind of nonsense statistic is an unemployment rate that doesn't count this fraction? It's not like those people still don't need a place to live and food to eat even if they can't find a job after six months of looking. Finally, >"The central bank has expressed concern that a robust job market exerts upward pressure on wages — and prices." Translation: workers get a larger fraction of the profits created by their labor if job markets are tight, putting downward pressure on executive bonuses and shareholder dividends, and we can't have that! Everything must go to the rich, since the most important measure of societal success is the billionaire count.

varelse 4y ago
[dead]
mschuster91 4y ago
> What kind of nonsense statistic is an unemployment rate that doesn't count this fraction? It's not like those people still don't need a place to live and food to eat even if they can't find a job after six months of looking. "leave the labor force for good" can be legitimate - think someone on a longer sabbatical, going FIRE (financially independent / retire early), going to an extended stay in prison or becoming a permanent stay-at-home parent.
anovikov 4y ago
People who left the labor force are simply those who no longer need work. FIRE people, women who got successfully married/successfully divorced, etc.
- gtk40 4y ago
  > FIRE Or just expand to any retirees not just those who do it early.

curiousllama 4y ago

I wonder, to what degree are the drivers of inflation tied to Main Street trends (jobs numbers, consumption spending, etc) vs Wall St trends (asset bubbles, money supply, expectations, etc)? I recall in 2008 discussing this divide a lot. Finance recovered, but normal people never did. Whereas both sides used to be codependent, the stock market rose in ‘09 when folks still didn’t have jobs. I wonder if we’re bringing things back in line now. Inflation IS declining, the last MoM report notwithstanding, even as we’re adding net jobs. Perhaps I’m a bit optimistic. But could we finally be actually recovering from ‘08?

licnep 4y ago

Like Warren Mosler (founder of MMT) argues, you can think of rate hikes as basic income for the rich. Since the US Debt to GDP ratio is so high now, rate hikes are creating a higher deficit spending from the government into the economy (bondholders) which can be more than enough to counteract the contractive effect of rate hikes. https://fred.stlouisfed.org/series/MTSDS133FMS https://fred.stlouisfed.org/series/MTSDS133FMS

deleted 4y ago
[deleted]
anonporridge 4y ago
Can't you also think of rate cuts as basic income for the rich, because they tend to cause a rise in asset values as money searches for yield, and the rich own most of the assets AND rich people can take out very low interest loans backed by their assets rather than selling, which allows them to spend money without triggering a tax event?