![]() ![]() A recent poll from FiveThirtyEight and Ipsos found that over half of the country says inflation is the most important issue facing the country, well ahead of issues such as political extremism, gun violence, and climate change. Inflation in the US is at levels the country hasn’t seen in decades, and people, frankly, hate it. The economy isn’t terrible, but a combination of factors make it feel like it is - and that it’s only going to get worse, even though that’s not at all a foregone conclusion. Regardless, the breakneck pace of the recovery from the pandemic recession is slowing down. The Federal Reserve is tightening monetary policy to try to combat inflation, which could push the economy into a recession. “It’s just a noxious brew that’s come together and is weighing very heavily on the collective psyche at this point.” Add to inflation over two years of a pandemic, war in Ukraine, mass shootings, and political dysfunction, and it makes it hard to say you feel good about anything, including the economy. People can’t get around that, psychologically,” said Mark Zandi, chief economist at Moody’s Analytics. “Everything else is going swimmingly, but the inflation is painfully high. Twice a month, Emily Stewart’s column exposes the ways we’re all being squeezed under capitalism. The average price of gas nationally was $4.91 as of June 7, climbing just as many Americans get ready to hit the road for the summer. Rising prices are cutting into wage gains for workers. The elephant in the room is, of course, inflation, which is high and, for most consumers, just incredibly annoying. Stock market investors are still much wealthier than they were five, 10 years ago. The stock market is faltering, but the worst troubles seem to be concentrated to the high-flying tech sector that was bound to cool off a bit. Business profit margins are coming down some but are not disastrous. Household and corporate balance sheets are strong. Job openings are at near-record levels, and many workers who want to find something better are doing so. The unemployment rate is low, and the labor market is strong. This sense of dread is so pervasive that it might surprise you to hear that many aspects of the US economy are generally in good shape right now. There’s this nagging sentiment that we’re in a precarious spot, that there’s some economic boogeyman lurking just around the corner. This is perhaps not the best way to run a business, but it is indicative of the current mood - a lot of people have a sense that something’s just off in the economy, or it’s about to be. It allows companies to keep growing while also dampening medium to longer term inflation pressures by keeping a lid on wage growth.Elon Musk recently told Tesla executives he has a “super bad feeling” about the economy, so he wants to pause hiring and cut the company’s workforce. If labour supply is rising as well, this will ease some of the strains on corporate America. The near-term outlook for jobs remains very positive with job vacancies surprisingly rising earlier this week to 11.2mn, equivalent to two job vacancies for every single unemployed American. Wages themselves rose a little less than expected at 0.3% month-on-month versus 0.4% consensus, but the year-on-year rate held steady at 5.2% for the third consecutive month. It looks as though workers may finally be returning as the rising cost of living and higher wages, together with rapidly receding Covid caution, incentivise finding a job. Consequently the unemployment rate rose to 3.7%, but for a really positive reason. However, the eye-catching thing was the jump in worker participation (to 62.4% from 62.1%) with the civilian labour force increasing 786k in August. ![]() The household survey (used to generate the unemployment rate) was even more impressive. Unemployment rate rises for a positive reason ![]()
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