Job Growth Surges Again, Fueled by the Fed’s Huge Monetary Overhang
The Bureau of Labor Statistic (BLS) released new jobs data on Friday. According to the report, seasonally adjusted total nonfarm jobs rose 311,000 jobs (seasonally adjusted) in February, which was nearly 100,000 jobs above expectations. The unemployment rate rose slightly from 3.4 percent to 3.6 percent (month over month) but this partly reflected a rising labor participation rate which rose to 62.5 percent, the highest estimate since March 2020.
These numbers point to continued resilience in the job market, even if the employment numbers are not nearly as good as the Biden Administration has attempted to claim. The total number of employed persons, for example, is up less than one percent over two years. Nonetheless, this report suggests we have yet to see widespread layoffs extend beyond the growing layoff totals in the tech sector.
The current relative strength in the job market partly reflects the ongoing monetary overhang from years of breakneck growth in money-supply inflation. It is apparent that the $6 trillion in money that was newly created since 2020 is still very much a factor in the present economy. Even with a historic collapse in the money-supply growth since last fall, the economy appears to still be in only the very early phases of an economic bust that is to be expected in the wake of a monetary slowdown.
In spite of the “good” news of continued job growth, however, markets fell on Friday. This is partly due to the fact that in the current policy environment, good news is bad news because Wall Street interprets strong jobs numbers as an indicator the Federal Reserve will continue raising interest rates. Wall Street, the real estate industry, and the investor class in general want the opposite: a return to an environment of very low interest rates and easy money. (Markets also fell because of the failure of the massive Silicon Valley Bank on Friday morning.)
Once we take a closer look at the employment numbers and other economic indicators, however, we find plenty of indicators that recession is indeed on the way within the next year. Weak economic data in manufacturing, real wage growth, and home prices all point toward overall economic decline.
Weakness in Full-Time Employment
Month-over-month job growth was generally positive. February brought an end to a six-month trend in employment in which growth in full-time employment was c
Article from Mises Wire
