In America, hiring is on the rise. A hot labor market could cause the Fed to intensify its war on inflation and make a recession worse than anticipated.
The country added 263,000 jobs in November according to the Bureau of Labor Statistics. That's above the 200,000 payrolls economists predicted, and means one more month than expected.
Growth was positive for most major industries in November, despite the fact that job creation in November was lower than in October.
The increase in November is good news for workers. Average hourly earnings rose 5.1% in November, above the 4.6% that economists predicted. In November, earnings rose 1.6%.
The job market is doing well. According to the lead economist at Glassdoor, employers are still adding workers despite the headlines. That's a positive sign for people who are still trying to find a job that's right for them.
Nick Bunker, the economic- research director at Indeed Hiring Lab, told Insider that the labor market has a lot of resilience.
Bunker said that the recent growth in earnings and employers adding jobs at a "really rapid rate" has given both jobs and wages a boost. Workers still have the power to negotiate.
All that data is good news for workers, but it could have dire consequences for the economy.
The US labor market is slowing down, however it has more steam than the Fed would like. The central bank has raised interest rates four times in a row in order to cool off the labor market.
The labor market is continuing to shine bright despite the concerns of some Democratic lawmakers who argue that the tactic could push the economy into a recession and cause a lot of job losses.
Interest rates will likely need to stay high for some time, even though the chair of the Federal Reserve indicated that rate increases could slow in December.
Powell believes that restoring price stability will require holding policy at a restrictive level for some time. "History cautions against premature easing of policies." We will keep going until the job is done.
Bunker said that the risk of an imminent recession is relatively low.
There's still a chance that the Federal Reserve could become more aggressive in raising rates if the labor market continues to improve.
The current labor market is good news.
It might not be good news for the last half of next year if the Fed interprets it that way.
The economy has been in a state of recession for the last few months.
According to economists at Bank of America, the US will enter a severe economic downturn in the first quarter of 2023, with growth falling by 0.4%. Major US stock indexes are predicted to plunge 25% when a potential recession hits, according to economists atDeutsche Bank.
Most predictions for a recession next year have been that it will be shallow and mild, according to Brian Moynihan, the CEO of Bank of America.
The job market isn't growing as fast as it did last year. The Fed was concerned about the cooling of job openings.
The report doesn't change the Fed's view of the labor market. "Yes, we did see wage growth tick up a little bit, but I thought it was more of a speedbump on the Fed's path towards the soft landing."
Achieving a soft landing, in which the Fed combats inflation while avoiding a recession, is possible, but the path to do so continues to narrow
"If you look over the course of this year, nobody expected us to raise rates this much, no one expected inflation to be this strong and this persistent and to have spread so broadly through the economy," Powell said.
He said that keeping rates higher would narrow the path to a soft landing. If inflation data is good, then we could very much achieve this.
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