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America Is On The Brink Of An Unemployment Fiasco

For the first three years of the pandemic recovery, the labor market was one of the bright spots that helped drive America’s world-leading economic boom. But increasingly, there are signs that the job market is losing some steam. Whether it’s hard data like the unemployment rate or sentiment-based surveys of businesses, it’s clear that the labor market has cooled off.

This cooling off should be a cause for concern because unemployment tends to be inertial — like a rock rolling down a hill, once it starts to move, it tends to keep moving in that direction. And unless someone steps out in front of the rock to slow it down, the recent deterioration raises the possibility of a further increase in unemployment. It’s clear that the Federal Reserve should be the force to slow down the sliding job market.

What the Fed does next will greatly affect the chances of avoiding a larger increase in unemployment.

It spent the past few years raising interest rates in an attempt to slow rapidly increasing prices, but with inflation largely tamed, the risks have now shifted toward the labor market.

Waiting too long to lower interest rates to support the economy will only increase the odds of the job market breaking down.

In short: The Fed needs to hurry up and cut.

Read more here from Business Insider. 

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