The latest Job Openings and Labor Turnover Survey (JOLTS) report by the BLS shows there are still a lot of job openings, but that should continue to decline from the post-pandemic high of 12 million job vacancies in 2022.
Could that mean no more rate hikes by the Fed this year? Pundits and economists are mixed on that possibility in part because Fed Chair Powell gave mixed signals about Fed intentions at his annual Jackson Hole speech—from saying the job market is too tight to the possibility of no recession and a soft-landing scenario maybe next year.
“The number of job openings edged down to 8.8 million on the last business day of July, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations changed little at 5.8 million and 5.5 million, respectively. Within separations, quits (3.5 million) decreased, while layoffs and discharges (1.6 million) changed little.”
The key fact was that the number of job openings (black line in graph) has been declining sharply, and the number of hires is declining more slowly (blue line). There were just 187,000 nonfarm payroll jobs added in July’s unemployment report. But retailers are gearing up for the holidays.
Over the month, job openings decreased in professional and business services (-198,000); health care and social assistance (-130,000); state and local government, which had increased the most in last month’s unemployment report. Whereas job openings increased in information (+101,000) and in transportation, warehousing, and utilities (+75,000), jobs in demand over the holidays.
The August unemployment report comes out this Friday, and there’s no real consensus by economists on what it might be.
Other news was a big drop in one consumer confidence report by the Conference Board that said consumers are losing confidence because energy and food prices are rising again, just when they thought inflation was being tamed.
Although bad news for consumers, it’s music to the ears of Powell, since it could mean less consumer spending, which in turn could depress the inflation rate without further Fed actions.
What is making Fed officials nervous is the Atlanta Federal Reserve’s advance estimate of third quarter economic growth jumping to 5.9 percent because of higher third-quarter real gross private domestic investment growth, thought to be an almost unbelievable growth rate just weeks ago.
I said last week that GDP growth is soaring because private capital spending has also picked up, proving that governments must kick start many of those projects that don’t promise enough profits to bring in private investment, i.e., long term projects like roads, bridges that pay for future growth.
But said spending doesn’t have to be inflationary, as inflation hawks maintain. It inflates the budget, but doesn’t have to boost inflation if it’s paid for; i.e., if tax revenues keep up with spending, which is after all a reinvestment in our productivity, just as private industry does with its capital spending.
This is the truth that Wall Street and the inflation hawks don’t like to hear, either. It’s the chicken and the egg problem. Inflation occurs because not enough of something is produced when demand is high for such things. Policies that slow growth are counterproductive, because they seek to dampen demand rather than spend to produce more.
Harlan Green © 2023
Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen
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