In light of these circumstances, the Federal Reserve has cut interest rates twice in a row, while “Christopher Waller,” a member of the Board, is calling for faster cuts during the December 10 meeting. However, the magazine points out that the general pessimistic mood does not reflect the full picture of the data.
“The Economist” recalls that the past decade was among the best in the history of the American labor market, with unemployment remaining at record lows, and real wages, especially for those with low incomes, saw a significant increase of 19% since 2015. However, inflation remains at 3%, which increases concerns about a possible slowdown.
The magazine believes that the current concerns are based on three main factors: the gradual decline in the number of job vacancies and the slight increase in the unemployment rate, the widespread layoff announcements by major companies such as “Amazon” and “Verizon” before they appear in official data, and the sharp decline in American consumer confidence, who have become more pessimistic about job opportunities in the near future.
But scrutiny of the data gives a completely different impression; the unemployment rate is still only 4.4%, a historically low level, and the employment rate in the prime age group of 25-54 years is approaching its highest levels. In addition, early recession indicators have moved away from the danger zone, the Atlanta Federal Reserve’s forecasts indicate continued strong growth, and stock and bond markets continue to show signs of stability that are inconsistent with an imminent collapse scenario.
The magazine points out that part of the reluctance to hire was related to the political uncertainty resulting from the policies of President “Donald Trump,” especially tariffs and immigration rules, but this situation is gradually fading, which enhances companies’ willingness to hire again.
“The Economist” concludes that public concern is understandable, but it does not find enough support in the figures, and that the fundamentals of the American labor market remain strong and do not indicate an imminent collapse.
