Jakarta –
Historically there is no data showing that a recessionary economy can create 528,000 jobs in a month. This happened in the United States (US), where there was an increase in employment by 528 thousand.
Thanks to this, the US recorded its lowest unemployment rate since 1969, which was 3.5%. However, this condition does not mean that the US has avoided the threat of a recession.
Quoting CNBC, Saturday (6/8/2022), it is ironic that the resilience of the labor market can pose long-term dangers to the economy. The Federal Reserve (US Central Bank) is trying to reduce the pressure caused by these conditions, such as rapid wage increases to control the highest inflation in 40 years.
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“The fact of the matter is this gives the Fed additional room to continue tightening, even though it increases the chances of pushing the economy into recession,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
According to CME Group data, as of Friday afternoon (5/8), the market set about a 69% chance of the central bank imposing a 0.75 point rate hike.
So, while President Joe Biden celebrates the rise in the number of workers in the US, ominous data may come next week. The consumer price index, inflation percentage will be out on Wednesday. Expected to show continued upward pressure, although gasoline prices in the US have been sloping.
This would complicate the central bank’s balancing act of using interest rate hikes to dampen inflation without bringing the economy into recession.
As Rick Rieder, head of global fixed income investment at asset management giant BlackRock, puts it, the challenge is to make a smooth landing when the economy is hot, and land on a runway that has never been used before.
(hns/hns)
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