Strength of the labor market acknowledged

In the September meeting, FOMC (Federal Open Market Committee) members acknowledged that the labor market has continued to show strength. Members noted that job gains have remained solid and that the unemployment rate has remained low.

Participants also discussed the developments in wage growth, citing lower levels of wage growth and employee compensation due to competitive pressures on employers.

How FOMC Members Assessed the US Labor Market in September

Labor market conditions impacted by hurricanes

FOMC members also noted that the labor market conditions could take a hit due to the hurricanes in August and that this was evident in the October non-farm payrolls report, which indicated a loss of 33 thousand jobs in September.

Members felt, however, that the rebuilding efforts in the hurricane-impacted areas could lead to increased demand for housing sector (ITB) (XHB) workers and could even help increase wages in those regions.

Unemployment is not a problem for the Fed anymore

The September FOMC meeting minutes indicated that members were content with labor market conditions and hawks in the FOMC were using the labor market strength to advocate another rate hike in December. There were concerns regarding labor productivity and a few members saw further increases in labor utilization, which continue to remain below the pre-recession levels.

This could help explain the reasons for the failing of the Philips curve. According to the Phillips curve, lower levels of unemployment should lead to a higher level of inflation (TIP). For the time being, both markets (BND) (SPY) and the Fed don’t seem to be worried about the labor market.

In the next part, we’ll discuss FOMC members’ views of equity markets.

Latest articles

15 Jul

Will Amazon Prime Day 2019 Break 2018's Record?

WRITTEN BY Jitendra Parashar

This year, Amazon extended its Prime Day to 48 hours instead of the 36-hour sale in July 2018, making the 2019 event the longest Prime Day ever.

In a series of tweets on Monday, Trump today weighed in on China’s GDP growth, which came in at a 27-year low.

15 Jul

OrganiGram's Third-Quarter Earnings

WRITTEN BY Adam Jones

On Monday morning, OrganiGram's third-quarter earnings came in as a bit of a let-down. Here's why.

Trump is reportedly planning to increase the content of US-made steel in federal projects, which would be a lifeline for US steel companies.

Huawei is preparing for “extensive layoffs” in the US, which could put the US-China trade deal on the rocks.

With Q2's Netflix earnings just around the corner, here's what you can expect from the online streaming giant and the broader streaming space.