Employers posted 11.5 million job openings in March, more evidence of a tight labor market that has emboldened millions of American workers to seek better paying jobs and contributed to the biggest surge in inflation in four decades.
Yet, there were signs in Friday’s report from the Commerce Department that inflation might be slowing from its galloping pace and perhaps nearing a peak, at least for now.
Treasury Secretary Janet Yellen said Thursday in an address at the Brookings Institution that countries need to build in “recession remedies” to protect people in the U.S. and globally going forward.
The economy’s overall decline in the January-March quarter does not mean a recession is likely in the coming months. Most economists expect a rebound this quarter as solid hiring and wage gains sustain growth.
U.S. consumer confidence dampened slightly in April but remains high even as inflation continues to cloud optimism about the rest of the year.
As the Federal Reserve sees it, the surge in job postings forces employers to boost wages to attract and keep workers. Those higher labor costs are then passed to customers in the form of higher prices, thereby helping fuel inflation.
Soaring prices on everything, particularly at the gas pump, are now making shoppers choosier about how they spend their money.
Even excluding volatile food and energy prices, which have driven overall inflation, so-called core inflation jumped 6.5% over the past 12 months, the biggest such increase since 1982.
The Fed last month kicked off what’s expected to be a series of interest rate hikes to tame inflation, but the efforts to temper demand will take time to materialize.
Not-for-profits of all kinds are getting hurt by inflation, experts say. Price and wage increases are stressing them in multiple ways, making it harder to keep up with their own basic operational expenses while also forcing them to curtail the services they provide.
The next few months will test whether President Joe Biden built a durable recovery full of jobs with last year’s $1.9 trillion relief package, or an economy overfed by government aid that could tip into a downturn.
In minutes from their policy meeting three weeks ago released Wednesday, Fed officials said that half-point interest rate hikes, rather than traditional quarter-point increase, “could be appropriate” multiple times this year.
Treasury Secretary Janet Yellen made her remarks to the House Financial Services Committee. They were part of her annual testimony on the state of the international financial system.
The government’s report Friday showed that last month’s job growth helped shrink the unemployment rate to 3.6%. That’s the lowest rate since the pandemic erupted two years ago and just above the half-century low of 3.5% that was reached two years ago.
Squeezed by inflation, consumers increased their spending by just 0.2% in February, down from a much larger 2.7% gain in January. Adjusted for inflation, spending actually fell 0.4% last month.
Big companies have successfully raised prices for their products because their customers have kept lining up regardless. What’s uncertain is how much longer the trend may last, before customers sharply cut back on their purchases.
Looking ahead, growth is likely to slow sharply this year, particularly in the first three months 2022. Higher inflation will likely weigh on consumer spending as Americans take a dimmer view of the economy.
The “yield curve” is watched for clues to how the bond market is feeling about the U.S. economy’s long-term prospects. On Tuesday, a closely followed part of the yield curve gave investors some cause for concern.
There were 11.3 million available jobs last month, matching January’s figure and just below December’s record of 11.4 million, the Labor Department said Tuesday.
Biden is proposing a total of $5.8 trillion in federal spending in fiscal 2023, which begins in October. The deficit would be $1.15 trillion.
