The Atlanta Journal-Constitution
Job market up, but so are prices — again
Fewer Americans filed for jobless benefits last week despite efforts by the Federal Reserve to loosen the labor market with higher interest rates as it tries to cool the economy. But it’s not all good news on the economic front: Wholesale prices in the United States re-accelerated in January, indicating that inflation pressures continue to underlie the U.S. economy despite longer-term signs of improvement.
What’s happening?
Applications for jobless aid in the U.S. for the week ending Feb. 11 fell by 1,000 last week to 194,000, from 195,000 the previous week, the Labor Department reported Thursday. It’s the fifth straight week claims were under 200,000.
Two weeks ago, the government reported that employers added a better-than-expected 517,000 jobs in January and that the unemployment rate dipped to 3.4%, the lowest level since 1969.
Job openings rose to 11 million in December, up from 10.44 million in November and the highest since July. For 18 straight months, employers have posted at least 10 million openings — a level never reached before 2021 in Labor Department data going back to 2000. In December, there were about two vacancies for every unemployed American.
Why are things still so expensive?
From December to January,
the government’s producer price index jumped 0.7%, driven up in part by a 5% surge in energy prices. That increase compared with a 0.2% drop from November to December, and it was nearly twice the rise that economists had been expecting.
The producer price data reflects prices charged by manufacturers, farmers and wholesalers, and it flows into an inflation gauge that the Federal Reserve closely tracks. It can provide an early sign of how fast consumer inflation will rise.
Can this be fixed?
Since March of last year, the Fed has raised its benchmark interest rate eight times in hopes of slowing the economy enough to conquer high inflation. Inflation has, in fact, eased since hitting a four-decade high in mid-2022. The rate hikes, however, have had the broader economic effect of raising the costs of mortgages and auto loans as well as credit card interest rates.