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Friday’s economic data is expected to show job growth resumed in September but was still suppressed by the latest wave of coronavirus, which has led Americans to avoid restaurants and travel and has made some reluctant to re-enter the market. work.
Economists polled by FactSet expect the report, released by the Labor Department, to show employers created nearly 500,000 jobs in September. That would be double the 235,000 jobs created in August, but well below the more than one million added in July, before the more contagious Delta variant caused an increase in coronavirus cases across much of the country .
Economists expect the unemployment rate to fall to 5.1%, the lowest since the start of the pandemic. But this decline does not reflect the millions of people who have left the workforce and have so far been reluctant or unable to return to work.
Data released on Friday was collected in mid-September, when the Delta wave was near its peak. Since then, cases and hospitalizations have declined across much of the country, and more recent data from private sector sources suggests that economic activity has started to rebound. If these trends continue, employment growth could approach its pre-delta pace later this fall.
“This report is a peek in the rearview mirror,” said Daniel Zhao, economist at career site Glassdoor. “There should be some optimism about a re-acceleration in October.”
Nonetheless, the recent downturn shows the economy’s continued vulnerability to the pandemic and the challenges that will remain even after it ends. There are still millions fewer people on payrolls in the United States than in February 2020, and millions of people have been unemployed for six months or more, the standard threshold for long-term unemployment. Yet the number of vacancies is at an all-time high and many employers report having difficulty filling positions.
Earlier this year, many economists and policymakers hoped that September would be the month when this impasse began to ease, with schools and offices reopening and extended unemployment benefits ending. This easing did not take place. The resurgence of the pandemic has delayed the reopening of offices and disrupted the start of the school year, and made some people reluctant to take jobs that require face-to-face interaction. At the same time, preliminary evidence suggests that the removal of unemployment benefits has done little to push people back to work.
“To be honest, I’m a little confused,” said Aneta Markowska, chief financial economist at investment bank Jefferies. “We all waited until September for this big hiring wave on the assumption that unemployment benefits and the reopening of schools would bring people back into the workforce. And it doesn’t seem like we’re seeing that. “
Federal Reserve officials will likely keep a close eye on Friday’s jobs report, as their two jobs – trying to foster full employment while keeping inflation under control – increasingly prove to be an exercise in ‘balance.
Jerome H. Powell, the chairman of the Fed, and his colleagues inject $ 120 billion into the markets each month and keep interest rates close to zero to keep borrowing costs cheap and credit fluid, helping thus fueling demand and encouraging employers to develop and hire.
Officials have signaled that they will soon start slowing bond purchases – something they could announce as early as November based on cumulative labor market progress, even if the September jobs report does not. is not a blockbuster. But they have repeatedly promised to continue supporting the economy with low interest rates for as long as it needs their help. Deciding when it’s time to withdraw that aid might be a trickier judgment than central bankers had anticipated.
After years in which inflation climbed very slowly – giving the Fed leeway to help bring the unemployment rate down steadily – it took off in 2021. The pop increased almost entirely because of the whims. of the pandemic. Strong consumer demand for refrigerators and computers overwhelmed supply chains at the same time as coronavirus-related plant closures delayed parts production. The combination has led to shortages of items as diverse as rental cars and washing machines, driving prices up.
“This is not the situation we have been facing for a very long time, and it is a situation where there is a tension between our two goals,” Powell said in a recent public appearance. He later added that “managing this process over the next couple of years, I think, is the highest and most important priority, and it’s going to be very difficult. “
This calls attention to each of the Fed’s two goals, full employment and stable inflation that averages 2% over time.
Central bank officials hope the jobs lost during the pandemic will return soon, but progress in recent months has been halted. Economists believe employers likely created about half a million jobs last month, up from 235,000 in August.
They are also closely monitoring inflation, which stood at 4.3% in August. Officials expect today’s price pressures to be temporary. But it has become increasingly clear that while drivers are mostly on time, they could linger for months. Shipping routes are struggling to catch up, pandemic epidemics continue to force factories to close, and now soaring commodity prices threaten to keep price increases high.
The Fed is watching closely to ensure that long-term inflation expectations remain at healthy levels. If consumers and investors expected higher inflation, they could change their behavior, creating a self-fulfilling prophecy.
Some key indicators of the outlook for consumer prices have started to increase. This raises an unfortunate possibility: The Fed could find itself under pressure to raise interest rates and cool the economy before jobs fully rebound.
While a central bank cannot do much to stimulate better port capacity or more apartments, it could arguably dampen demand by raising interest rates. With fewer consumers buying condos, sofas, and patio furniture, factories, home builders and freighters could catch up, helping to ease cost pressures.
But higher rates would also slow business growth and hiring, trapping pandemic unemployed people on the fringes of the job market. That is why Mr Powell and his colleagues advise patience, in the hope of avoiding overreacting to a price hike that will run out.
“They’re still walking a tightrope, but that rope is getting a little thinner,” said Nela Richardson, chief economist at payroll and data company ADP. She expects the Fed to curb bond purchases for inflation, but doubts higher prices will lead to rate hikes. Fed forecasts suggest these will arrive no earlier than next year.
“I think they’re trying to see past that moment,” she said.
The Economic Injury Disaster Loan Advance, a hastily deployed emergency relief program at the onset of the pandemic, had fraud protections so poor that it improperly distributed nearly $ 4.5 billion to self-employed workers who reported having additional workers – even those who made extremely implausible claims, such as having a million employees.
The $ 20 billion program provided small businesses with immediate grants of up to $ 10,000 in the months after much of the economy was shut down by the pandemic. But there was no system to detect requests containing “erroneous or illogical information,” Hannibal Ware, the Inspector General of the Small Business Administration, wrote in a report released Thursday.
Nearly 5.8 million applicants received grants based on the size of their company: $ 1,000 each for up to 10 employees. Sole proprietors and independent contractors who employed only themselves should have received a grant of up to $ 1,000 – but many received larger checks.
Some claims were downright absurd. Hundreds of applicants received the maximum grants after saying they employed more than 500 workers, a number that would generally make them ineligible for the small business program. Fifteen said they have a million employees, a figure that would put them in competition with Amazon and Walmart.
The report, which described how the agency could have spotted bogus applicants by taking even rudimentary steps to prevent fraud, was the last black eye for the SBA READ ARTICLE →
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