The U.S. economy added 263,000 jobs in November while the unemployment rate held steady at 3.7 percent, according to the Labor Department. CEI experts break down what’s going on in light of inflation, labor shortage, and lawmaker worry over the economy.
Ryan Young, CEI Senior Fellow
“Once again, the labor market held steady, despite fears that the Fed’s interest rate hikes would spark a recession. One reason those fears are overblown is that the federal funds rate is still below the inflation rate. When real interest rates are below zero, they are expansionary, and the Fed needs to raise them further. They will remain negative even after the Fed likely raises them by a half percentage point next week. Clearly more analysts need to re-learn the difference between real and nominal interest rates.”
Sean Higgins, CEI Research Fellow
“The Labor Department’s report Friday that the unemployment rate remains at 3.7 percent, adding 263,000 jobs in October, is further evidence that the economy is cooling.
“Employers are cutting back on hiring, as evidenced by November being the second straight month of jobs gains just above 260,000. Earlier this year job gains were around 400,000 monthly. With the labor force participation rate largely unchanged at 62.1 percent, employers have had to add further enticements just to get workers, forcing wages up 18 cents in November. Leisure and hospitality gained 88,000 jobs in November, indicating that the country is continuing to shake off the effects of the Covid pandemic.
“The cooling economy has Washington spooked, as evidenced by its forcing a contract on the railroads and their unions in order to prevent a potential strike. But an unemployment rate of 3.7 percent is far from a new great depression. Lawmakers should avoid further knee-jerk actions and let the economy recover on its own.”