RALEIGH – NCSU economist Dr. Mike Walden sees a mix bag of indicators in Friday’s jobs report but concludes that the Federal Reserve is likely to hike interest rates again in its ongoing battle with inflation.
“The report insures – in my opinion – more rate hikes from the Fed,” Walden tells WRAL TechWire. “Most would consider this bad news.”
More than 260,000 jobs were added – higher than some economists forecast – and the unemployment rate fell to 3.5% from 3.7%, the government reported early Friday. The Fed is trying to slow the economy with the interest rate hikes yet companies are continuing to hire.
“Good news: Net job gains were made in both the household survey and business establishment survey. Also the jobless rate dropped to 3.5%,” Walden notes.
However, he sees “bad news” in the numbers.
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“Part of the reason for the reduction in the jobless rate was a reduction in the percentage of adults in the labor force,” he explains. “Also, while total jobs increased, there was a reduction – albeit small – drop in retail sales jobs. This could mean retailers are worried about consumer spending, and could mean reduced hiring for the Christmas buying season.”
Amazon on Thursday said it would hire 150,000 people for the holidays and other positions – the same as last year. Some 1,000 jobs will be added in the Raleigh area and thousands across the state, Amazon said. But hiring plans for other companies are mixed.
Why?
“Like so many aspects to our lives, the pandemic is changing the economy,” says Walden. “With jobs continuing to rise, some economists believe we may see businesses react to a slowing economy NOT by reducing jobs, but simply by pulling back their unfilled jobs.
“This may create a situation where we never see an absolute drop in jobs, which typically happens during a recession,” he warns.
“Does this mean we never will actually have an officially-declared recession if the job market never suffers losses? The rules for recession may be re-written by the pandemic.”
US adds 263,000 jobs – more than expected – unemployment rate declines
