NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Creighton University economist Ernie Goss looked at the addition of 175,000 jobs reported on Friday and sees that as a sign that the Federal Reserve may act sooner rather than later to lower interest rates.
"The unemployment rate is still well below what I would call the natural rate of unemployment," Goss said. "A lot of that is just due to, there continue to be a lot of workers that are out of the labor market, not entering the labor market, just because of post-COVID conditions and age related issues. In other words, baby boomers are getting older and dropping out of the labor market."
Even where employment is added, it's not necessarily in areas that signal real growth.
"The manufacturing sector is very different from the other overall sector," Goss said. "In other words, a lot of the jobs have been added in government jobs, either federal, state or local. Likewise, we're seeing job additions in leisure and hospitality. As a result, the wage increase that was lodged for the month was down for the month. Wages were down, especially if you adjust for inflation."
Goss notes that the rapid expansion of government spending is hiding the fundamentals of the economy, to a point.
"Absent this growth in federal spending, we would have been in a recession," Goss said. "What's happened is, the Federal Reserve has been taken off the table. It matters not that much what the Federal Reserve does. It does matter, of course, but not nearly as much as it has in previous years, in previous decades, in fact, because the federal government is spending money hand over fist. There is a deficit this year, going to be probably $2.2 trillion."
It still remains to be seen how quickly, if at all, the Federal Reserve chooses to act. The next Federal Open Market Committee meeting is in June.
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