Unemployment Hits 50-Year Low In US
WASHINGTON, DC (IANS) – US unemployment numbers have dipped to a 50-year low in the month of December, in the surest sign of economic recovery from the debilitating impact of the Covid-19 pandemic and, more recently, the global oil price hike triggered by the Ukraine war. But inflation remains a stubborn challenge.
US President Joe Biden understood that and reminded the country as he celebrated the new job report. “Today’s report is great news for our economy and more evidence that my economic plan is working. The unemployment rate is the lowest in 50 years. We have just finished the two strongest years of job growth in history. And we are seeing a transition to steady and stable growth that I have been talking about for months,” he said on January 6.
But Biden cautioned: “We still have work to do to bring down inflation and help American families feeling the cost-of-living squeeze. But we are moving in the right direction.”
Inflation stood at 7.1 percent for the 12 months that ended in November, according to the most recent count from the Labor Department; a new estimate is expected later in January.
The US Fed Reserve Bank’s intervention started last June as inflation soared to a 40-year high of 8.6 percent, with a massive rate hike of 0.75 percent, which was the most since 1994. Six more hikes would follow over the next few months of varying sizes, the last of which was half a percentage point in December.
The goal of these hikes is to curb spending by making credit costly. But there are fears that they may end up restricting production – if consumers don’t buy, companies won’t have much to sell and will cut production – and slow down the economy, triggering a recession.
The Fed is set to announce another rate hike after the January 31-February 1 meeting of its top decision-making body. But there are indications that hikes might be smaller in the range of quarter percentage points, according to the minutes of the body’s December meeting that were released this week.
The Biden administration also took a shot at inflation – through the ambitious $370 billion Inflation Reduction Act, which seeks to lower the deficit by higher taxes on the super-rich, extend healthcare benefits, lower prices for certain prescription drugs, and a historic investment in clean energy.
The real battle on inflation, meanwhile, has continued to be fought at gas pumps and in grocery stores. Gas prices continue to be rise and fall, pushed up by the Ukraine war, despite several rounds of releases from the US strategic reserves ordered by President Biden.
A direct consequence of the economic uncertainties – through not linked solely to inflation – has been large layoffs in the tech sector starting with Facebook and Twitter in November. More than 125,000 tech employees were laid off in 2022. And it continues – Amazon announced Thursday it’s letting go 18,000 employees, its largest cut ever, and the day after online clothing company Stitch Fix is letting go of 20 percent of its staff and crypto Genesis said it plans to cut 30 percent.
These tech companies had hired aggressively during the Covid-19 pandemic as online usage by people peaked as they worked, studied, shopped, and played remotely from home. The return to normalcy has left these companies with an excessively bloated staff, which became increasingly unsustainable – more as fears of an economic downturn loomed.
