Jobsmacked

/ˈjäbˌsmakt/

A description of the feeling a person gets after receiving a piece of shock news concerning their employment i.e. demotion, redundancy, loss of benefit, changes to working routines or dismissal. Often due to unforeseen circumstances which lead to the recipient ending up in said state. (www.urbandictionary.com)

Last week America’s Federal Reserve gathered to discuss both the current state and outlook of our economy.  They concluded that the pace of economic growth has slowed (you can see this in the 2021 vs. 2022 gross domestic product figures) and that the labor market remained tight.  They also admitted that inflation remains above their target.  Given the recent trends, however, that could be transitory as many price proxies are off their cycle highs of just several months ago. 

All told, that was not a bad situation for last Wednesday’s policy announcement.  Employment and inflation are the two components of the American economy for which the central bank has mandates.  They are charged by Congress to aim for full employment while managing price gains.  Generally, these two are linked (i.e., as employment increases, competition for workers pushes wages higher, which ultimately pushes demand for goods and services higher, and this eventually leads to rising prices absent a change in productivity).  The Fed might have gained reason for greater concern of Friday, however.

Friday was the date the Bureau of Labor Statistics released their January 2023 jobs report.  It likely left our central bank jobsmacked.  America’s economy added over half-million net new jobs and the unemployment rate dropped to its lowest level since May 1969.  This will likely add to any consternation Chair Jerome Powell may have about a strong labor market with rising wages and an increasing average workweek; these hardly seem like an antidote to stubborn inflation.  He and his policy-making cohorts will likely need to change their routine if this strength continues.  Atlas doesn’t have any moles inside the Eccles Building, but the strength of the labor market probably surprised its occupants.  When they publish their dot plot next month, we may see it remain higher for longer.