Credit union economists: weak job gains won’t deter the Fed

Federal Reserve Building, Washington, DC

The Fed is expected to stay on track to tighten monetary policy early next year despite Friday’s report of weak job gains, CUNA and NAFCU economists said.

The United States Bureau of Labor Statistics Report:

  • The nation gained 210,000 jobs from October to November after seasonal adjustments. The country had 148.6 million seasonally adjusted non-farm jobs in November.
  • October’s non-farm gain was revised up to 546,000 jobs from 531,000 previously reported.
  • November’s unemployment rate was 4.2%, down from 4.6% in October, in the household survey.

CUNA senior economist Dawit Kebede said the gain in off-farm jobs was smaller than expected, but the unemployment rate has seen “a sharp drop … a sign of continued recovery.”

The participation rate was 61.8% in November, compared to 61.6% in September and October and 61.5% a year ago.

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Kebede said the increased turnout shows “a return to work for some who have pulled out due to fears of COVID or lack of child care. The emergence of the new Omicron variant, which is more transferable than Delta, could derail progress in the job market and exacerbate supply chain disruptions if cases continue to rise.

Kebede said the persistence of rising inflation has led Federal Reserve Chairman Jerome Powell to signal that it is ready to end the large-scale asset purchase program sooner than expected.

“Although the economy is not yet at peak employment, a drop in the unemployment rate is a step in the right direction to accelerate these changes,” Kebede said.

NAFCU chief economist Curt Long said the report was a “mixed record,” but that it is unlikely to change the Fed’s plan to begin to end its program. bond purchase next year.

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Long said the BLS household survey showed a huge drop in the unemployment rate and a significant increase in labor force participation. However, its separate business survey found the gain of 210,000 jobs, “which is well below expectations.”

“It may take another month to really figure out what happened in November, but that doesn’t change much from the perspective of the Fed, which is looking at a takeoff in the first half of 2022,” Long said. .

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