The Jobs Market

One of the key factors in inflation is the strength of the jobs market and the current state of unemployment. It’s one of the key factors we examine as we determine where inflation is headed. The Federal Reserve watches this data very closely as well.
 
A strong jobs market means more consumption and purchasing power which tends to increase the demand of good to services. When combined with challenges in the supply chain, employment strength is one of the reasons why prices have accelerated. 
 
We believe inflation will be higher than historic averages. However, we also believe that there will be inflation relief over the course of the next six months as the Federal Reserve seeks to curb GDP growth. We are invested based on this perspective.
 
As you can see from the chart below, the unemployment rate continues to be low, putting pressure on prices:

Source: https://tradingeconomics.com/united-states/unemployment-rate 

A recent CNBC article highlighted the recent jobs report data. Please see below:

***

Begin quote 

“Companies added jobs at a brisk pace in February as the U.S. labor market kept humming, payroll services firm ADP reported Wednesday.

Wage growth decelerated slightly, with those remaining in their jobs seeing a 7.2% annual increase, down 0.1 percentage point from a month ago. Job changers saw growth of 14.3%, compared with 14.9% in January.

The report comes with Federal Reserve officials watching jobs data closely for clues on where inflation is headed. Remarks Tuesday from Fed Chairman Jerome Powell, who called the jobs market “extremely tight,” triggered a sell-off on Wall Street amid expectations that the central bank could accelerate the pace of its interest rate increases.”

End quote 

Source: https://www.cnbc.com/2023/03/08/adp-jobs-report-february-2023-.html 

***