Federal Reserve Chairman Jerome Powell is expected to affirm that more rate hikes are on the horizon during this week’s hearings. Because the recent Monetary Policy Report reaffirmed the Fed’s goal to bring inflation down to 2% and the most recent reading shows it stands at 6.4%, economists predict that Powell will only reiterate the need for rate increases. At the recent House Democratic Caucus Issues Conference, President Biden said, “The inflation has fallen seven straight months,” disregarding its 0.5% increase from December to January. Biden has highlighted job growth and the falling unemployment rate; however, economists have explained the tight labor market with the term “labor hoarding,” in which businesses opt to maintain their workforce levels in times of economic distress in order to avoid mass layoffs. “The bottom line is that labor supply is not increasing in any meaningful way, and there is no evidence that this will change any time soon,” said economist Thomas Simons.
Quartz via Yahoo Finance/Ananya Bhattacharya
The Fed is preparing for more interest rates hike, with an eye on the jobs report
The Federal Reserve is not likely to change its hawkish stance anytime soon.
Tomorrow (Mar. 7) and day after (Mar. 8), Fed chair Jerome Powell participates in hearings by the Senate Banking Committee and the House Financial Services panel respectively, to discuss the bank’s latest semiannual “Monetary Policy Report.” Published on Friday (Mar. 3), the report reaffirmed the central bank’s commitment to bring inflation down to 2%—the latest reading from January shows it stands at 6.4%. When questioned on rate hikes, Powell is therefore expected to say more interest rate hikes are on the horizon.
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Fox Business/Jay Caruso
Biden paints rosy picture of inflation, but pressure on consumers and small business owners persists
President Biden, speaking at the recent House Democratic Caucus Issues Conference, said, “The inflation has fallen seven straight months.”
It is not the first time in recent weeks the president tried to paint a rosy picture about the economy and inflation. In the State of the Union address, the president said, “Inflation is coming down” and “Food inflation is coming down.” He also said, “Inflation has fallen every month for the last six months while take home pay has gone up.”
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MarketWatch/Jeffry Bartash
U.S. unemployment is falling even as the economy slows. What the heck is going on?
Something funny is going on in the U.S. jobs market.
The economy has slowed since last year. More large companies such as Amazon AMZN, 0.89%, Dell DELL, 0.73% and Disney DIS, 1.09% have announced layoffs. And the odds of recession are rising.
And yet, the labor market is as tight as a drum. Companies are still hiring — and available workers are still hard to find.
Economists have a name for it: Labor hoarding.
You can read the full article, here.
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