I don't know about you guys, but I also found the content in this article somewhat "comforting" (last paragraph). I agree that we are still recovering from the 2008 housing crisis, but the fact that the labor force is rising by such a great number is encouraging and it is hopeful that the economy will continue to grow! What do you think the fed will do in light of this information?
http://www.nytimes.com/2016/04/02/upshot/this-is-the-job-market-weve-been-hoping-for-all-these-years.html?ref=economy&_r=0
The statistics look good: the unemployment rate has been decreased and wages are rising. Sure, the economy now looks way better than the times of the great recession and continues to move gradually towards the right direction. However, it's not fully stabilized to the point where the fed would move quickly to raise rates to boost the economy. The labor market has been growing with the exception of the manufacturing sector, which lost 29,000 jobs last month. Increase in wage is a good sign, but while people with high-paid jobs enjoy high wage rise, factory workers' wage has been rising moderately, deepening the income inequality.
ReplyDeletehttp://www.nytimes.com/2016/04/02/business/economy/jobs-report-unemployment-wages.html?action=click&contentCollection=The%20Upshot&module=RelatedCoverage®ion=Marginalia&pgtype=article
It is very promising to see the labor participation rate increasing. For a while, the unemployment rate was decreasing, but labor participation was still stagnant. It will also be interesting to monitor real wages and how they coexist with other labor metrics.
ReplyDeleteAn interesting point on this. I saw some analysis that said the increases in the labor force are actually not coming from the people who lost their jobs during the recession. It is actually people who, after delaying it by attending grad school or through some other means, are entering the labor force for the first time.
DeleteAccording to the NYT article cited, wages in US only have risen 0.3% as of March, and 2.3% throughout last year, which is still meaningful increase, when compared
ReplyDeleteagainst historically low inflation rate.
And I got to wonder if minimum wage increase actually helps reducing poverty. According to FRBSF, minimum wages raise will help individual workers with low wages,
rather than famillies with low incomes. And minimum wage increases can imply potential job losses for some people. Most importantly, benefits from raising the minimum wage would not necessarily go to poor families, but more to nonpoor families.
What do you guys think of such complications? Is minimum wage increase still a good policy all the time?
To answer your question Brian, I would expect the Fed to continue with their careful and gradual interest rate hikes. They don't want to keep these interest rates so low for too long. As we learned from our reading in Bernanke, keeping the interest rates low while the economy is growing and doing well could risk overheating the economy and lead to inflation
ReplyDelete