Strong job gains in US add to economic puzzle

[libertybele]

Strong job gains in US add to economic puzzle

Job creation in the US remained robust last month, despite rising prices and a sharp spike in borrowing costs weighing on the economy.

Employers added 339,000 jobs, but the unemployment rate rose to 3.7%, from April's unusually low 3.4%.

The gains were far greater than expected, continuing a streak of hiring that has surprised economists.

Analysts have expected hiring to slow as the US central bank raises interest rates to try to rein in rising prices.

But payrolls have remained resilient, raising hopes the economy will avoid a painful recession, while also stirring debate about whether the Federal Reserve will have to take more aggressive action to bring inflation under control.

Inflation, the rate at which prices rise, was 4.9% in the US in April.

While that was the lowest in roughly two years, it remained more than double the 2% rate that the bank considers healthy.

Expectations of what Friday's report might mean for interest rates in the months ahead were divided.

"This is the strangest employment report for some time," said Ian Shepherdson of Pantheon Macroeconomics, pointing to the disconnect between the job gains and the rise in unemployment reported by the Labor Department. ...


https://www.bbc.com/news/business-65790164

[DB]

People have been paid not to work for a long time now. Therefore they didn't seek jobs making the unemployment numbers look good even though the job participation rate was dismal. In addition, student loan payments have been on hold freeing up money that would otherwise not been available to spend reducing the need to work.

[Kamaji]

People have been paid not to work for a long time now. Therefore they didn't seek jobs making the unemployment numbers look good even though the job participation rate was dismal. In addition, student loan payments have been on hold freeing up money that would otherwise not been available to spend reducing the need to work.

Yup.  Add to that, for a lot of people who were unemployed or underemployed, rent payments were also put on hold in some states, making it impossible to remove a non-paying tenant, which freed up additional resources.

[DefiantMassRINO]

Until Biden's bad domestic energy policies are reversed, inflation will be an issue as fossil fuels are critical inputs for products and transportation.

Only supply-side economic policies will start to bring inflation down.  Inflationary energy and housing constraints have been imposed upon the economy via governments' policies.  Government policies are the largest contributors to long-term inflation because they prevent free market capitalist solutions.

The Fed can raise rates all it wants - it will cause demand destruction with unintended (or intended) consequences of creating a liquidity squeeze.

Many conservative financial institutions carry 30-year Treasuries as "safe" assets, but current Fed policy has made them toxic, contributing to balance sheet insolvency.  Too Big To Fail Banks will become Too Bigger To Fail.