US employers quickly offered new ones in October. Another 2.6 lakh 1,000 people will join the post in this recruitment process. This appointment shows that the economy is enjoying robust growth ahead of the election. However, the painful inflation remains.
Friday’s government report said last month’s hiring signaled a broader recovery in the economy, following the end of a two-year pandemic recession. Unemployment rose from 3.5% to 3.7% during the pandemic, the highest in five years.
This strong labor market exacerbates the challenges for the Federal Reserve. The situation arose when the Federal Reserve raised interest rates at its fastest rate since the 1980s in an effort to control high levels of inflation. Regular recruitment, decent wages and low unemployment are good for the workforce. However, this trend contributes to the increase in prices of daily commodities.
The October hiring numbers are the last major economic report before the election. Voters will be able to focus on the economic situation and their economic life.
Chronic inflation is hitting the financial plans of many households. And, on Tuesday, the midterm legislative elections that ended on Tuesday made voters even more anxious. Republican candidates across the country are attacking Democrats over inflation in a bid to regain control of Congress.
After the end of the recession, job creation by employers boosted consumer purchasing power despite high inflation. Increase in purchasing power even in a context of high inflation. In many cases, there is a labor shortage. And it forces companies to spend more to attract and retain workers.
President Joe Biden and congressional Democrats have cited strong hiring momentum as a positive effect of their policies. Their policies have helped Americans get to work faster than ever after the recession.
But this message has not worked in medium-term political campaigns due to rising inflation. Many Americans have expressed frustration with the current economic situation in the Democratic-led Congress and White House leadership.
Due to the strong federal policy of increasing interest rates, the cost of borrowing has increased. As a result, there is an unfavorable trend in the economy. In such a situation, recruitments in the housing and technology sector drop massively.
Especially in sectors like housing and technology, hiring has declined. Some tech companies, such as ride-sharing company Lyft and payment company Stripe, have announced plans to lay off workers. Amazon announced Thursday that it would suspend hiring. Examples include transportation services company Lyft and financial services company Stripe. They announced redundancy plans. Amazon says it will stop its corporate hires.
Despite these announcements from major companies, layoffs across the economy are exceptionally low. On the contrary, recruitment is increasing. The travel, restaurant, manufacturing and healthcare sectors are still hiring steadily. Southwest Airlines told its investors last week that it was on track to hire 10,000 more workers this year. It has 1200 pylons. Laboratory Corporation of America said it also plans to hire.
Fed Chairman Jerome Powell told a news conference on Wednesday that a strong labor market puts upward pressure on inflation as companies grow and pay them off.
The economy is still bullish. It rose 2.6% year-on-year in the July-September quarter. Despite this growth, inflation is alarming. And federal policy is increasing the cost of borrowing for consumers and businesses. Many economists believe another recession is looming early next year.