Is The Worker Shortage Transitory?

For the past several months, there have been two "T" words that have captivated the financial markets.

The first, of course, is the "Taper," which now looks like it may be starting as early as next month. Following its September monetary policy meeting, the Federal Reserve—using its usual weasel words—didn't exactly say it was ready to taper, but basically confirmed that it would begin soon, saying that "a moderation in the pace of asset purchases may soon be warranted." So we can probably expect the Fed to provide more definite information following its next meeting in early November, and that may include a start date of later that month.

The second "T" word is "Transitory," as in the "inflation is transitory" mantra Fed chair Jerome Powell has been repeating for most of 2021. However, recently he's backed off a little on that stance, telling Congress last month that while he believes inflation will eventually return to the Fed's 2% target rate, "these effects have been larger and longer-lasting than anticipated." In other words, maybe inflation isn't as transitory as he says, therefore the need to taper.

Now, after two crummy monthly job reports in a row, it may be fair to ask if the shortage of workers holding back the economy isn't transitory either. Continue reading "Is The Worker Shortage Transitory?"

Will We See The Fed In September?

George Yacik - INO.com Contributor - Fed & Interest Rates


It took less than two days last week for the financial markets to disabuse themselves of the notion that the Federal Reserve, this time, is really, truly, absolutely kind of serious about raising interest rates at its next meeting in September.

On Wednesday afternoon the Fed, as expected, left interest rates unchanged for the fifth straight monetary policy meeting since first raising rates last December, which was supposed to usher in a gradual process of rate “normalization” this year. As we know, of course, the Fed hasn’t followed through on that, finding one justification after another – rising oil prices, falling oil prices, weak Chinese economic growth, weak U.S. economic growth, Brexit, you name it – to delay the day of reckoning.

In last week’s post-meeting announcement, the Fed dropped several hints that might cause some people, even reasonable ones, to conclude that a rate increase might be in the offing at its next meeting in September. Continue reading "Will We See The Fed In September?"

Jobs Report Not Enough to Signal September Liftoff

George Yacik - INO.com Contributor - Fed & Interest Rates


Was May's better-than-expected jobs report strong enough to convince the Federal Reserve to start interest rate liftoff in September?

Based on the market's reaction on Friday, the answer sure looks like yes. Yields on long-term U.S. Treasury bonds spiked to their highest levels since last October, and stocks were mostly lower.

But let's not carried away with one number and one report. Certainly the data-paralyzed Fed won't. If we get three solid months of positive economic statistics, then I’ll think there's a chance – albeit a slim one – the Fed will make a move in September. Until then, we'll have to wait and see.

Notice I've already written off next week's Fed meeting as the first interest rate increase. While the minutes of the Fed's April 28-29 monetary policy meeting "did not rule out" the possibility of raising rates at the June meeting, it was "unlikely" that economic data would justify doing so by then. Nothing's happened in the meantime to change that. Continue reading "Jobs Report Not Enough to Signal September Liftoff"

Economy Post-'Jobs’ Report; Real or Memorex?

Now it gets interesting because early in the bailout process the Fed talked about achieving certain employment milestones before hiking interest rates.  Here we are at the 10th consecutive month with 200,000+ job gains (321,000 in November) and the jobless rate down to 5.8% and still there is a question on when or whether ZIRP will be withdrawn?

Well I am a visual learner so I for one can never get enough pictures to inform my thinking.  Pardon the redundancy in this chart’s frequent appearances in NFTRH

sp500
Source: SlopeCharts

The rectangular red box is zero interest rate policy (ZIRP), which is 6 years old this month.  If we play it straight we would be expected to believe what the mainstream believes, that the “Great Recession” is a thing of the past and that something built of abnormal policy can proceed per normal metrics and assumptions when abnormal policy is removed.  I don’t buy it. Continue reading "Economy Post-'Jobs’ Report; Real or Memorex?"

U.S. economy adds 88K jobs, rate drops to 7.6 pct

U.S. employers added just 88,000 jobs in March, the fewest in nine months and a sharp retreat after a period of strong hiring. The slowdown may signal that the economy is heading into a weak spring.

The Labor Department said Friday that the unemployment rate dipped to 7.6 percent from 7.7 percent, the lowest in four years. But the rate fell last month only because more people stopped looking for work. People who are out of work are no longer counted as unemployed once they stop looking for a job.

The percentage of Americans working or looking for jobs fell to 63.3 percent in March, the lowest such figure in nearly 34 years. Continue reading "U.S. economy adds 88K jobs, rate drops to 7.6 pct"