The United States faces a 40 th consecutive month of worse-than-expected inflation. Analysts expect a grim report showing that the Consumer Price Index (CPI) rose in September. Loss of demand The economy as a whole has now plunged into apparent full-blown stagflation, a combination of stagnant growth and high inflation. As recent unemployment has bounced up and wage gains have been lackluster, this emergent reality is most concerning to economists and policymakers alike.
The next CPI report, out on November 10th, is going to show just how much inflation is still hurting American consumers. Future projections indicate that inflation will continue to be high, worsening the economic pressures already felt by countless families. We have all been assuming that the Federal Reserve will finally make their first rate cut next week. This nearly unprecedented move would be a strong shift in monetary policy toward stimulating growth.
Recent labor market data is only deepening jitters about the economic stability. As the unemployment rate ticks up, concerns about job security may expose vulnerabilities. Great news indeed, especially in light of the weak US labor report for August where only 22,000 net new jobs were created. Most policy experts would consider this figure to be a rounding error in a robust economy. Plummeting job creation is causing a tidal wave. In addition, the four-month moving average of job growth has fallen to its lowest level in fifteen years, excluding the pandemic period.
This precariousness deepened in June, when the economy experienced its first net job losses since the onset of COVID-19. Such trends have been evident in the constant downward revisions to previous months’ employment numbers, which have been lackluster. Wage gains are still anaemic, as these increases do not come close to matching inflation, leaving many workers feeling financially pinched.
This persistence in failures to create jobs has caused many economists to doubt the strength of the labor market. Analysts note that the average number of jobs added over the past four months has been declining, indicating that the economy may not be generating enough opportunities to sustain long-term growth. This double whammy of stagnant wages and rising unemployment doesn’t bode well for economic prospects.