Wages rose sharply throughout the year until March and rising unemployment rates plummeted last month, indicating a hot labor market that could force the Federal Reserve to consider how much and how to reduce inflation quickly.
The central bank is trying to reduce its inflation target at a time when inflation is at an all-time high in the next 40 years. Fed officials began raising interest rates in March and said they could increase prices by half a month in May – twice as much as they normally would. everything. Making money more expensive by borrowing and spending can slow down spending and hire, reduce wages and increase prices.
Friday’s performance report could strengthen the case by a one-half increase.
Wages have increased by 5.6 per cent last year, the report showed, at a much faster rate than 2 to 3 per cent of annual salaries in 2010. At the same time, the unemployment rate dropped to 3.6 per cent in March. at 3.8 percent in February. Unemployment is now slightly higher than before the epidemic.
“Last year’s payroll rates are rising sharply; eliminates any argument that unemployment provides a reliable and reliable indicator of the labor market, “says Michael Feroli, US chief economist at JP Morgan.” The labor market is complex. “
While the strong labor market has given policymakers confidence that they can slow down the economy slowly without falling, fast pay gains can also drive up prices by helping consumers demand and encouraging companies to raise prices while trying to reimburse rising wages. .
“The promise of higher pay is a big deal,” said Jerome H. Powell, chairman of the Fed, following a decision by the central bank to raise interest rates last month. But the increase is “moving at levels above the 2 per cent inflation target – our target – over time.”
State of Jobs in the United States
Job creation and the number of employees who have resigned voluntarily in the United States remained close to history in March.
The March employment report showed that wages are growing much faster each year than Powell noted.
Investors were already expecting an increase in the first half of May, but after the release of the report on Friday the markets remained very strong in the forecast. Opportunity for interest rates to increase at a central bank meeting in June also increased.
Wages are rising rapidly as employers compete for fewer workers. There are about 1.8 opportunities for every unemployed worker, and companies are complaining about the difficulty of hiring various technical and industrial jobs.
Over the past year, wages have risen sharply for leisure and hospitality workers, up 14.9 percent, and travel and storage workers have also received double pay. The figures are for non-supervisors.
Wages also rose sharply during the last month of hospitality and hospitality, while wages also rose sharply for workers in the financial and industrial sectors.
Some economists have argued that monthly salaries, while still in the run-up, appear to have fallen slightly this year compared to the high prices they held last year. But several have suggested that the current trend, on the heels of a year of rapid gains and combined with operational difficulties, may be enough for the Fed to be more vigilant.
“If it stays that way, the pay increase will only increase from now on,” Feroli said. As for the Fed, he said, “I think they probably think it’s unstable.”
Rapid wage growth benefits many workers, even though families are finding that their wages, even if large, are no longer buying as prices rise. Wage earnings are not matched by rising prices for many workers.
Nonetheless, President Biden spoke of the rapid development of the labor market and the benefits of pay as well as economic benefits and the “kind of economic voice that we have been fighting for” in establishing policies.
“After decades of harassment and low pay, many American workers now have the real power to earn good wages,” Biden said. “Some people see this as a problem – we’ve talked about it before. I don’t. I think it’s a long time.”
But the White House is concerned about rising prices. The Biden government is rolling out oil reserves in an effort to lower oil prices. The government will also allow a few older immigrants to come to the United States this summer in order to reduce unemployment.
The demand for heat is not the reason for the rapid rise in prices – prices have risen again as retail chains have fallen short of the outbreak and have struggled to recover. But the fact that people want to buy furniture, clothing, and food in restaurants helps keep prices high.
As the economy increases employment at higher wages, more families have more income coming in than they could have. This could lead to consumer demand, even as the Fed begins to raise interest rates.
“It’s a waste of money to fight a war,” said Diane Swonk, an economist at Grant Thornton. “The labor market is the most important part of the whole process.”
Gene Lee, a senior at the Darden Restaurant, said on March 24 recipients expect the customers to continue eating even though their incidence of the epidemic is declining and fuel prices are rising, leaving home. Darden varieties include Olive Garden, LongHorn Steakhouse and Yard House.
While restaurants raised prices 6 percent in the last quarter of its 2021 fiscal year compared to the previous year, lower end-rate revenues were higher.
“We believe inflation across the country is rising sharply,” Lee said. “And we hope the buyer can do this right now.”