“It’s rarely stable,” Myers said. He called the dynamics that revolved around his business “a balancing act.”
In recent weeks, policymakers at the Federal Reserve have outlined a solution they claim could help solve both problems affecting the economy. In public opinion, Central Bank Chairman Jerome H. Powell and his colleagues argued that a steady series of seven-point increases this year would not only reduce rising inflation but also help restore the job market by reducing demand for workers.
Central bank officials are discussing more drastic rate hikes to control inflation
Higher interest rates Central Bank Ways to deal with inflation that make the cost of borrowing or investing more expensive and can reduce the costs for both households and businesses. If companies decide that they do not need more employees, the current high demand for workers will decrease.
Powell and other central bank officials hope their plan will balance the labor market and help address labor shortages, which will be an integral part of the recovery. According to the latest Labor Statistics, 4.4 million workers left their jobs, and in February, Americans continued to change jobs at a record rate. Powell frequently cites the fact that there are approximately 1.7 job opportunities per person looking for work.
“So this is a very tight labor market, tight to unhealthy, I would say,” Powell said last month. “The idea is that we’re trying to better balance demand and supply,” he said.
The central bank is raising interest rates moderately and plans a total of seven rate hikes this year
Yet the central bank’s plan – to reduce inflation and create fewer jobs – is tackling the need side of the economy. Rising tariffs alone will not increase the supply of labor or allay the fears of people affected by Govt disease. They will not be able to provide childcare for working parents, change immigration policy, or reinstate early retirees – an estimated 2.6 million – in the labor force.
Jason Furman, a senior economist in the Obama administration, said: “The central bank’s tools are designed to encourage people to hire more employers than they want to work. “I think our labor market is very tight, but the solution is not to have fewer jobs, but more people who want to work.”
Given the uncertainty in the post-epidemic world, economists say it will be difficult to pull off the central bank’s plan. Russia’s invasion has shaken global energy markets, with widespread expectation that American families will feel the brunt of the gas pump. The recent Govt strikes at major Chinese manufacturing centers have revived the global supply chain woes and provided a sobering reminder of the current economic threat of the epidemic.
As many as 4.4 million people in the United States lost their jobs or were replaced in February due to higher turnover
For millions of people returning to work, low prices are paramount. Last month, Willie Price was recalled to his long-term job after being fired following an epidemic in the spring of 2020. Price, 62, has worked in the Library of Congress for 42 years as a foodie. For many years, thanks to her morning paper way and other odd jobs during epidemics. But she relied on the work of the Library of Congress to take care of herself and her son.
He now earns $ 20.37 an hour – a small increase before the epidemic – but said Wages did not rise as before. She used to spend $ 135 a month for a parking spot, but now she has to park the garage Costs $ 400. She also pays for more gas Drive from her home in Maryland to Capitol Hill. Also the groceries are expensive: she likes to cook salmon, shrimp and chicken, but now “the ingredients you want to eat are too expensive to eat.” Even though she is old Working in the Library of Congress, she did not feel like the economy was finally working for her.
“I work from salary to check to do what I have to do,” Price said. “I have no large sums of money in the bank.”
To complicate this dual goal of tackling inflation and revisiting the job market, the central bank must do everything it can to keep businesses from laying off people or triggering a new recession. The There is the central bank A random Record record for raising rates to cool the economy – many economists point to only 1994, when the central bank raised interest rates and slowed growth without shrinking the economy altogether.
Less hot showers, less meat: How retirees on a steady income deal with inflation
History often went the other way. Since 1961, the central bank has introduced nine full cycle rate hikes to combat inflation. According to research by investment bank Piper Chandler, the recession followed those eight efforts.
“Powell says, ‘This time will be different,'” said Roberto Berley, a former federal economist and now head of Piper Chandler’s global policy. “Maybe it’s time to be different. But it’s always a dangerous thing.
Furman acknowledged that the central bank would be under intense pressure to reduce inflation without having any repercussions on the labor market: “The only thing I’m committed to reducing inflation is the rising unemployment rate.”
In a speech last month, Powell argued that the central bank’s record with interest rate hikes Was somewhat better, pointing to other events in 1965 and 1984 in which the federal government fought the heat without getting the economy in trouble. No one at the central bank said it would be easy to pull off its plan. Interest rates cannot target specific gaps in the economy, and even repeated rate hikes operate with regression.
Regardless of the economic expansion and the ability of the central bank to obtain prices, the job market will be very similar to the normal one.
“We need to keep inflation in check on both sides of the mandate,” Cleveland Fed President Loretta Meister told reporters in March. “The best thing we can do if we want to maintain healthy labor markets is to sustain expansion, that is, our duty to control inflation.”
Today Economic forces are in practice Contrary to what policymakers faced two years ago, 20 million people lost their jobs and the central bank cut rates to zero to revive the economy. For the majority of the epidemics, central bank leaders postponed raising rates so that there would be as much room as possible for the job market to recover. And until 2021 inflation will not be a problem. Powell and his colleagues focused on getting jobs to their pre-epidemic strength, raising those who often fell on the margins of a tight labor market economy.
But the labor market of 2022 shows a different kind of austerity, which many policymakers and economists argue is not fundamentally vulnerable. As businesses hunt down workers, wages rise and put pressure on overall prices. At their policy meeting in March, central bank officials announced that they had business connections across the country Pass pay rises and hikes The cost of doing business for customers. Economists warn that such a wage-price spiral will always be a difficult form of inflation for the central bank to intervene.
At the same time, workers’ wage cuts are rapidly being eroded by the cost of basic necessities. With the price of petrol, shelter and food causing the highest inflation in four decades, price rises have spread to every pocket of the economy. Economists do not expect house prices or rents to fall anytime soon, and the war in Ukraine is another blow to global energy and food prices.
The dual pressures of labor shortages and inflation are particularly acute in restaurants, which are being wiped out by waves of virus depending on personal contact. According to data from the Bureau of Labor Statistics, the industry has not recovered 820,000 jobs lost by the epidemic.
The epidemic closed three of Tyler Akin’s four restaurants on the East Coast, and he often blames Congress for not providing enough relief to keep his industry afloat. Recently, he struggled to find enough staff for his French prairie at the Hotel du Bond in Dell, Wilmington. Hiring bonuses and paying to get a “wishlist” on the job site is now “a constant expense to do business,” he said.
This is on top of the rising price for being open, Akin said. As restaurants rely on take-out orders, the price of packaging has gone up. The basic ingredients, especially proteins, are constantly rising in price. Then there is the need to constantly pay attention to the virus waves because the customer demand may decrease and then suddenly arise again.
“Labor costs are a bit high, so you have these two forces – commodity price inflation and labor cost inflation – which create the perfect storm,” Akin said.
Andrew van Damme and Aba Bhattarai contributed to this report.