Weekly Buzz: The US jobs market is still running red-hot
🪄The US Is (Still) Working Wonders
What’s going on here?
Data out last Friday showed that the US added more jobs than expected again last month.
What does this mean?
The US economy’s grappling with regional bank woes and a good old-fashioned slump right now – but the jobs market appears to have missed the memo. A whole 253,000 jobs were added last month, leaving the modest prediction of 180,000 in the dust. And sure, some businesses hit the brakes on hiring or let staff go – but others were still trying to fill empty office chairs, even the ones with high salaries. That’s probably why average hourly wages outpaced April’s expectations – clocking in at 0.5% monthly and 4.4% annually.
Why should I care?
The bigger picture: Chin up.
This may not be the news the Federal Reserve (the Fed) hoped for, especially days after hinting at a pause in interest rate hikes. But let’s look at the bigger picture: the Bureau of Labor Statistics downwardly revised previous months’ figures, which suggests that those estimates were somewhat overblown. And that means the Fed’s efforts might just be cooling the red-hot market slowly but surely. Plus, tighter lending conditions will take time to make themselves felt – and the central bank holding rates at their highest since 2007 is almost destined to leave its mark too. So, while some say the Fed might have to step in again, there’s still a solid chance it can just stay the course.
Zooming out: Matter of life and debt.
The US has a short-term issue on its mind too. The nation routinely spends beyond its means, and it issues bonds to make up some of that shortfall. But the spendthrift government’s already hit its borrowing limit – and that’s got it scrambling to raise the so-called “debt ceiling”.
If politicians can’t pull that off, Uncle Sam could wind up cash-strapped, jeopardising millions of jobs and grinding welfare payments and infrastructure projects to a halt, and putting a dent in financial markets too. And according to Treasury Secretary Janet Yellen, they need to get their act together by June 1, the so-called “X-date”.
This section was written in collaboration with Finimize.
🎓Jargon buster: Debt ceiling and X-date
The debt ceiling is a legal limit that caps the amount that the US government is allowed to borrow by issuing bonds. Only the US and Denmark have debt ceilings set at an absolute number as opposed to percentage of GDP. The current US debt ceiling is US$31.4 trillion.
The X-date – the actual date when the US government can no longer pay its bills. The exact date, however, is difficult to pinpoint because it depends on what the US government has to pay out and how much tax money the US Internal Revenue Service (IRS) is able to collect.
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