Take a gander at the opening paragraph in today’s FOMC Statement.
> Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.
Key Points
- Labor Market: continued to strengthen
- Economic Activity: rising at a strong rate
- Job Gains: strong
- Household Spending: continued to grow strongly
- Business fixed investment: moderated from its rapid pace
Fed Action
Nothing
Bond Market Reaction
- No change in yield in 3-month of 30-year bonds.
- The 5-year yield is up a few basis points while the 10-year yield and 2-year yields are up a couple of basis points.
The reaction is a bit of steepening from the perspective of the 3-month yield but a bit of flattening from the perspective 2-year and 5-year to the 30-year long bond.
Mike “Mish” Shedlock
The labour market is far weaker than official figures imply. This has been the case and Janet Yellen was smart enough to recognize such, even though its not reflected in the official statistics.
I wonder why there are labor shortages everywhere and wages are going up to attract workers in every category. Is that what you mean by weaker? The fed purposely underreports economic strength. If someone is without a job its by choice. More people would be in the labor market if the govt would quit giving free stuff to those to lazy to work.
The Fed does most of the handing out of free stuff directly.
Doesn’t make the government doing it any better. But in the in big scheme of things, as far as free stuff goes, it’s what the Fed does that is economically damaging. While what the government adds on top of that, is just a sideshow.
The government rely primarily on restrictive laws, rules, regulations courts and taxes for their contribution to the destruction of America. Leaving the Free Stuff handouts primarily to the Fed.
I strongly disagree. Ask any construction company and they are short both skilled and non skilled labor. I see help wanted signs everywhere here in MI. There is no job shortage. I don’t know where you are referring to but it sounds like its in the middle of BFE there may be a lack of jobs but in that case people have to move just as they did with the southern migration north for good paying factory jobs.
Again, you must be pulling figures about STEM jobs out of your ass. My son just graduated with a math degree and he had no problem finding work or any of his classmates with the same degree. Not one is unemployed. If you have a STEM degree and can’t find a job there is something seriously wrong with you. You have to be making this shit up.
The big problem in construction historically is that employers are hiring people and then laying them off at the first sign of a lack of work. Perhaps the industry needs to adjust such practices.
First, if the economy is strong in 2018, that’s proof that you can print your way to prosperity. That would be an argument for something like UBI.
As for labor shortage, I’ve worked in companies where they are hurting for people, but mainly due to schizophrenic policy changes from above. Sometimes they waffle between FTEs and contractors. They’ll frequently approve a job posting, then put everything on hold while resumes collect dust. I’ve personally known numerous managers who have to raise hell to their superiors to get even one person in the door, all this for multiple job openings that have already been posted!
There’s no way your claim of shortages of both “skilled and non-skilled labor” can possibly be true. Less than half the country is in the labor force, and as many others keep saying, wages would rise with a true labor shortage. It’s basic supply and demand.
If you believe the propaganda your dear leaders put out I would say congratulation you are one of the good sheep. If numbers show only moderated wage growth as well as low CPI it benefits them by giving them cover to suppress interest rates below the natural rate. Who benefits…. your dear leaders. The debt interest payments are kept affordable as well as enriching the hard working people on wall street. But you can go ahead and believe the politburo figures if you wish.
Let’s take a breath here. I’m claiming that the Fed and BLS figures are bogus because they’re purposely overestimating economic strength. This allows them to churn out stats on wage growth and CPI that justify the status quo of permanently low interest rates. These baby step quarter point increases are due to fear of crashing things, and only done to provide ammo to cut again later when things begin to unravel.
You’re claiming that things are BETTER than the Fed and BLS report, which is already pretty rosy. Again, this would indicate that we can print to the moon without ill effects, that artificially low interest rates work. That’s nonsense, of course.
To believe what you’re saying, you have to simultaneously posit that the economy is strong, but so weak that rising rates would crash things, due partly to the horrific debt interest payments you mention. You also admit that low interest rates benefit Wall St at the expense of everyone else, yet things are just great in MI. I know the region, I grew up in OH and it depresses me every time I go back to visit family. Things aren’t great in my area of flyover country, to put it mildly. This is why they placed hope in an “outsider” like Trump to shake things up, because they knew they were headed to oblivion.
I think we believe the same thing but not the same cause. I do believe the economy is stronger than reported but only based on my anecdotal evidence. Everthing from unskilled factory work to skilled work is in short supply and wages are going up to attract workers. At least in the Detroit metro area. New home prices are insane. By reporting statistics that indicate moderate wage growth and cpi it give them cover to print as you say. Either way TSWHTF at some point. A black swan or whatever. If something can’t go on forever it wont. I think a lot of people are working under the table for one. I also think a lot of workers would come into the workforce if they didn’t fear losing their medicaid health insurance. A problem that would be easily solved by univeral health care. That is another argument however.
A premium would be expected by most workers to actually work in Detroit given the risks, including that of establishing oneself in an area which is significantly prone to crime and could very well see the bottom fall out again. Employers need to overcome such — that’s no more indicative of widespread labour shortages than, in say, the North Slope of Alaska where employers have to take some special measures to recruit and retain employees as well for obvious reasons.
If loss of public healthcare is an issue, then obviously the jobs that are being created aren’t of very high quality. Quality jobs would certainly pay enough that loss of Medicaid would not be an issue. Its just not reasonable for the Fed to suppress wage growth to such an extent that people are unable to systemically gain independence from government.
OMG do you really believe that bloviating idiotic nonsense??? Detroit has less crime than lets see, CHIRAQ with the highest murder rate in the nation despite having the most stringent gun control laws. Your e.g. is stupid. Detroit has a much lower cost of living and way better quality of life. The suburbs are wealthy and well established, in fact has some of the wealthiest suburbs in the US. Please don’t make a fool of yourself by denigrating Detroit. Maybe if one is a govt parasite it wouldn’t be worth picking up to move here. Most good jobs do have health insurance as a benefit but most entry level low skilled jobs don’t so yes health insurance coverage is an issue in getting people to leave the tits of the govt for a real job.
OK, can agree that we’re likely to experience a SHTF scenario. Don’t know when, but always looking for clues in either economic data or social moods for timing.
Have to agree to disagree about a strong economy. Hope any belief in its existence is not politically motivated. Too many people who used to see clearly suddenly forgot everything two Novembers ago when they abandoned reality for the new orange flavored “Hope and Change”. Whenever the next blue teamer becomes POTUS, we’ll regain these people but lose others, because that’s how this dumb country works.
You are beyond help. A card carrying member of Antifa who would never let facts get in the way of forming an opinion. Good luck living in your socialist utopian shithole fantasy.
I am not though does that make me a demoncrat?
As Janet told us, we’ll likely never see another financial crisis in our lifetimes…except for the continual crises caused by clueless central bank economists. 🙂
She didn’t see the crisis coming until it hit, so her crystal ball isn’t very good.
As if overpriced stuff getting slightly less so, and economically destructive firms and activities having to cut back a tiny bit on their destructive activities, is some sort of bad thing one should brag about avoiding…
I always enjoy statements from these FOMC meetings where no action is taken. It’s reminiscent of Leslie Nielsen in the Naked Gun, telling onlookers to disperse. Nothing to see here!