Posted on 10/06/2023 8:33:05 PM PDT by SeekAndFind
Today’s jobs report brought good news for the American people. More jobs than expected were created in September, and even the July and August jobs numbers were revised up.
How did market analysts react to this news?
Well, I suppose you could say they had mixed views including its implications for the Federal Reserve's interest rate policy.
Some analysts believe that the strong job growth and upward revisions to previous months' data suggest an over-heated labor market and increases the likelihood of a rate hike by year-end. They argue that this could put pressure on bond yields and lead to further tightening measures.
STUART COLE, CHIEF MACRO ECONOMIST, EQUITI CAPITAL, LONDON
"We had already been given hawkish comments from some Fed officials this week. Add in today's numbers and I think consensus will be for another hike by year end."
"If we get a stronger inflation report next week it could be a difficult time for the markets."
However, other analysts express relief about wage growth remaining tepid and unemployment rates staying level. They suggest that these factors may dampen inflationary pressures and could cause the Fed to reconsider its rate hike strategy.
HELEN GIVEN, FX TRADER, MONEX USA, WASHINGTON DC
"Reading the signs ahead of time the big indicator for this was JOLTS on Tuesday, posting another big upside surprise. I wouldn't be shocked if this crazy high figure gets revised down a little bit next month, but it's definitely a good sign for the US economy."
"Also important to note, average hourly earnings ticked down slightly and unemployment stayed level at 3.8%, so I'd hazard a guess the Fed is pretty pleased with this morning's release."
Overall, the general consensus is that the job growth report is significant and may influence the Fed's decisions, but there is uncertainty regarding the exact impact on interest rates and the overall economy.
In other words, more Americans are working, and instead of that being seen as a positive thing by "the Street," it’s seen as a bad thing because it means the party-poopers at the Federal Reserve will have more reason to yank away the punch bowl.
The predominant economic view of those who serve on the Federal Reserve, as well as those with 7 figure salaries on Wall Street, is that inflation is caused by too many people working. Keep in mind that doesn’t include too many people on Wall Street working, but, rather, too many people on Main Street.
The pessimistic reaction to what most Americans would consider positive economic news is seen as storm clouds by those who supposedly know more about this stuff than the average American. But that is only because they've been trained to believe this way.
Job creation is not inflationary. Prosperity is not inflationary. Economic growth is not inflationary. A weak and unstable dollar is inflationary.
A strong jobs report is an economic positive. Full stop. The Federal Reserve, rather than seeing it as more ammunition to manipulate interest rates, should shift its focus to what is actually its primary role, which is to maintain the stability of the dollar.
Let’s get real for a moment. A strong jobs report reflects a healthy and efficient labor market where businesses have the confidence to expand and hire more workers. This indicates a well-functioning free market system that does not require constant intervention from the Federal Reserve or other government busy-bodies.
Indeed, how interesting is it that the economy added over 300,000 jobs during the same period that the politicians in Washington DC were wringing their hands over the probability of a government shutdown. The real economy was likely pulling for a government shutdown lest the politicians do more mischief. Change my mind.
Inflation is an outcome of monetary policy decisions rather than a consequence of full employment. By maintaining its focus on price stability and keeping the dollar stable, the Federal Reserve can reduce the risk of inflation without throwing a wet blanket over the American economy.
Furthermore, the strong jobs report also indicates that resources, such as labor, are being efficiently allocated within the economy by an invisible hand of the market. Americans used to understand this. As businesses expand and hire more workers, they are effectively utilizing available resources to meet increasing demand.
And, here's the point, an increase in demand follows an increase in investment leading to increases in production. None of this is inflationary.
It is important to allow the economy to adjust and adapt naturally to changing circumstances, rather than relying on artificial interventions and attempts to fine-tune economic outcomes. Markets are smarter than the economists and academics at the Federal Reserve.
Lastly, there’s something quite unseemly, if not ghoulish when a bunch of billionaire hedge fund managers lament an economy that is putting more Americans to work and providing working families with the disposable income they need to save, invest, and improve their standard of living and their overall quality of life.
Change my mind.
Milton Friedman: “Inflation is always and everywhere a monetary phenomenon”
These jobs are low pay ones. It’s a transition from middle class to lower class for many. Also, the many are getting extra jobs to make ends meet. The middle class is being destroyed right now.
It is well known that a very small percentage of employees contribute the vast majority of overall productivity. You can examine just about any medium to large business and find plenty of employees that not only don’t contribute to a business’ productivity, but works against productivity. Just look at HR, DIE and everything woke under the sun and you have over employment.
Quite honestly, increasing unemployment numbers has never bothered me. It just means the unqualified lazy asses don’t have jobs. (That’s at the macro level and it is a generalization, since certainly not all businesses are created the same and some good employees lose their jobs too.)
Here’s a experiment for you. This month’s increase in employment was primarily in the leisure and hospitality. Observe the quality of service you get when you go out to eat. Compare that to the quality of service you get once employment numbers tank. (They will soon.) I’m willing to bet you will get better service after employment tanks, and prices will not have increased from their high during peak employment.
These last people to get hired are last for a reason. They are not productive, they increase the cost of good and services sold. They partly contribute to inflation. (Key word: partly. The primary contributor is too many dollars in the economy chasing too few goods.)
To your point, GE under Jack Welch used to rate all employees and fire the bottom 10% every year. There has always been a set of people who float from job to job (often getting fired) for various reasons we all can name. I get the feeling that group is a larger percentage of the work force these days.
I guess they prefer slaves.
In related news, our gubmint is raising the chocolate ration to twenty grammes a week!!!!
It is the exact opposite. Inflation causes the need for second jobs.
Article is just wrong on so many levels. People willing and able to spend is the cause of inflation. Raising interest rates slows investment and the movement of money in general and the result is a slower economy which tames inflation.
Derek Price was a British physicist and scientist who made a unique observation about his academic peers He noticed that a small percentage of them were making most of the contributions to their field. From this he developed "Price's Law." (also known as Price's Square Root Law) which states that 50% of all work will be done by the square root of the total number of people who take part in the work.
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That’s a fairly small number. If you have 100 employees, then 10 do 50% of the work. It takes 90 to do the other half. I think you can be certain that a good percentage of the 90 don’t do any work at all. They get in the way.
Anyone believing the numbers coming out of the BLS are the same type people who believed all the covid BS numbers coming out of the CDC.
They’re all lies based on what’s needed to make whoever is in charge look good or bad.
Actually, a look at the details show that last September, GOVERNMENT JOBS GREW by over a million hires. How many of these are new IRS agents for which then Speaker McCarthy allowed to be allocated is still to be determined.
Classic inflation comes from an expansion of the money supply beyond the expansion of the economy.
Shortages or price increases in core inputs, such as labor or energy, can lead to widespread price increases.
Look at history. Look at other countries. Government issuing fiat currency and excess printing to cover excessive government spending is the more frequent cause of inflation. From Argentina, to Columbia, Venezuela, etc. It’s excess government money printing to cover government spending. That is the exact situation we are in now. It’s not the 1920s or a Gold Standard economy. Your US economic model is nearly 50 years (1974) out of date.
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No, inflation is caused in one place only and that is Wash DC. Businesses don't have printing presses.
No. Spending does not cause inflation. The printing press causes inflation. period.
Ninety dollar oil causes inflation
Nope.
from: https://fee.org/articles/rising-oil-prices-create-inflation/
The simple truth is that, by themselves, rising oil prices cannot cause inflation. Most people seem to have forgotten the hard-earned lesson that inflation occurs when too much new money or credit is pumped into the economy.
...
If countries with weak currencies wish to avoid inflation, they need not worry about rising oil prices per se. As Milton Friedman has said, “Inflation is everywhere and always a monetary phenomenon.” Governments and citizens would do well to remember this adage.
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