The pandemic caused some of the highest unemployment rates since the Great Depression. These rates messed up the U.S. economy in many different ways such as inflation levels and wages. As the U.S. looks to recover from the pandemic emotionally, there are a lot of economic recoveries to be done, with the main concern being unemployment and inflation rates.
In December of 2022, private payrolls went to 235,000 compared to the 153,000 estimate that the DOW Jones had for that month. Seeing how the U.S. economy has been struggling to keep unemployment low through the pandemic this is a very promising thing to report. This growth is led by service providers who made up 213,000 of the 235,000 total payrolls while the producing goods sector had the other 22,000. Despite the increase in these sectors other ones such as trade, transportation, and utilities had a 24,000-job loss.
With all of the new payrolls in this sector and many others, the FED looks to continue to raise inflation rates to counterbalance the new payrolls. With the pandemic coming to an end, many are getting jobs back at an exceedingly fast pace. While this is a good thing in retrospect it's taking its toll on the economy and making it hard to find an equilibrium point. There are so many jobs available now that there are 1.7 job openings for every 1 worker. As the FED continues to work toward this equilibrium, they are raising their expectations for payroll growth in the following months in 2023.
It'll be really interesting to see how the FED can balance inflation without taking a huge toll on our government. But with inflation being combated faster than anyone expected, it'll seem interesting to see how it plays out.
ReplyDeleteThe pandemic did have an overwhelming effect on multiple factors within the United States. Whether we have fully bounced back from this event I think is a mystery to all. I think companies will continue to suffer from these events for longer than expected.
ReplyDeleteCorrect me if this is incorrect, but I think that comparing the unemployment rates to the great depression, while may be close statically, is not correct in reality. During the great depression, companies could not afford to pay workers leading to mass layoffs, however, during the pandemic, because the government was sending checks to try to keep us away from another depression, companies would layoff workers to benefit both the worker and the company, and because of that companies now have the ability to rehire those workers. There may still be unemployment because of the pandemic, but I think in the long term, workers are much more able to find work than in the time proceeding the great depression.
ReplyDeleteThe labor market adding 500k+ jobs in January is also very promising towards equilibrium, despite layoffs from big tech companies. The Fed is likely to keep increasing interest rates with wage growth.
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