It’s a sign of the country’s bizarre economic situation that some economists, not to mention stock market traders, viewed the decline in unemployment to match 50-year lows as bad news: stocks fell Friday morning after the jobs report came out. That’s because continued hiring means the Federal Reserve will likely continue its campaign of sharp interest rate hikes that are intended to slow the economy down, and bring supply and demand into balance to cool inflation. However, that strategy could risk causing a recession by making money too hard to borrow and dragging down business activity too much. While the prospect of cooling the rampant price increases for life’s necessities may be welcome for households, price relief will likely come at the price of lower wages, more difficulty finding jobs, and potentially millions of people being laid off. Officials at the central bank believe the job market, with its extremely low unemployment rate, is “out of balance” with workers having too much power, and that pay raises are contributing to inflation. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
