Federal Reserve Chair Jerome Powell said the Fed was sticking by its bedrock economic forecast. Yet, the nation’s leading economic figure acknowledged that it isn’t at all clear when or even whether things will play out the way he and other Fed officials hope.
The Fed’s likely decision this week to taper its bond purchases comes as high inflation is bedeviling the U.S. economy for much longer than Federal Reserve Chair Powell and many other officials initially expected.
Just 35% of Americans now call the national economy good, while 65% call it poor, according to a poll by The Associated Press-NORC Center for Public Affairs Research.
American consumers slowed their spending in September, a cautionary sign for an economy that remains in the grip of a pandemic and a prolonged bout of high inflation.
In all, 2.2 million people were collecting unemployment checks the week of Oct. 16, down from 7.7 million a year earlier.
Consumer spending, which fuels about 70% of overall economic activity, slowed to an annual growth rate of just 1.6% after having surged at a 12% rate in the previous quarter.
The absence of reliable and affordable child care limits which jobs people can accept, makes it harder to climb the corporate ladder and ultimately restricts the ability of the broader economy to grow.
The slowdown has been attributed to a surge in cases from the delta variant over the summer and supply chain problems, which disrupted manufacturing output in many sectors, especially auto production and helped send consumer prices rising at the fastest pace in 13 years.
Economists point to a range of factors that are likely keeping millions of former recipients of federal jobless aid from returning to the workforce. Many Americans in public-facing jobs still fear contracting COVID-19, for example. Some families lack child care.
Unemployment claims are increasingly returning to normal, but many other aspects of the job market haven’t yet done so. Hiring has slowed in the past two months, even as companies and other employers have posted a near-record number of open jobs.
In its latest survey of business conditions around the nation, the Fed said a majority of its 12 regions viewed consumer spending, the main driving force for the economy, as remaining positive despite the various speed bumps.
Procter & Gamble, the maker of Pampers diapers, Tide detergent and Crest toothpaste, said it’s raising prices on a range of goods as higher commodity and freight costs are set to take a bite out of its profits.
The International Monetary Fund called Thursday for greater efforts from wealthy nations to boost COVID vaccination rates in poorer countries, while also urging the Federal Reserve and other central banks to respond quickly if current inflation pressures prove not to be transitory.
Applications for jobless aid, which generally track the pace of layoffs, have fallen steadily since last spring as many businesses, struggling to fill jobs, have held onto their workers.
Such a move would mark the Fed’s first step back from the extraordinary efforts it has made to stimulate the economy in the wake of the pandemic.
The unexpected burst of inflation this year reflects sharply higher prices for food and energy, but also for furniture, cars, televisions, and other largely imported goods.
The Labor Department said that quits jumped to 4.3 million in August, the highest on records dating back to December 2000, and up from 4 million in July.
U.S. employers added just 194,000 jobs in September, a second straight tepid gain and evidence that the pandemic still has a grip on the economy with many companies struggling to fill millions of open jobs.
After hitting a pandemic low of 312,000 in early September, claims had risen three straight weeks, suggesting that the highly contagious delta variant was at least temporarily disrupting a recovery in jobs.
Of the 18 service sectors surveyed, 17 reported growth in September, led by retail trade. The only one that contracted was the agriculture, forestry, hunting and fishing sector.
