US Economy: Lots of Growth, Not Enough Workers or Supplies – Riverside, CA
More than a year after the coronavirus caused a record economic fall and job losses, the rate of recovery has been surprisingly rapid.
The US economy is causing turmoil and whiplash at about the same rate as job increases.
More than a year has passed since the coronavirus caused a record economic fall and job losses, but the recovery has been surprisingly quick, so many companies have been able to fill their jobs or over-clients. It was also not possible to ensure a sufficient supply to respond to the explosion. Request.
“Things exploded. It was like a light switch, ”said Kirby Maron, president of Elmer Schultz Services, a family business in Philadelphia. “The job market is just out of control. We literally cannot hire a technician. We grew too fast, but the supply chain was not ready for it. “
Economic forecasters, who have little historical precedent to guide them through the aftermath of a global pandemic, are asking questions they cannot answer with confidence.
Is strong consumer spending a reflection of the economy and resilience, or is it temporarily bolstered by federal stimulus controls?
Was April’s Consumer Price Index a temporary hike or a worrying sign of accelerating inflation?
Is the two-month moderate job growth the result of too many good things? Does the employer want as many jobs as possible? Or is the job market as strong as economists think? Implication that there is not?
In many ways, the news was encouraging. From January to March, the economy grew at a tremendous rate of 6.4% per year. And this quarter, the pace is expected to accelerate to nearly double digits.
But the big picture of the US economy is pretty subtle. Here are five vital signs in detail.
Employers added 559,000 jobs last month on top of 278,000 in April. These are generally considered very healthy numbers. However, with record vacancies and free consumers, predictors expected more jobs. Some economists expected that the recovery from the pandemic recession would increase jobs by 800,000, 900,000 and even over a million per month.
What explains the shortage?
Economists mainly point to what they call a short-term lag. Companies are posting job vacancies faster than applicants can respond. After all, many Americans have health issues associated with COVID-19, childcare issues with a delayed reopening of school, career uncertainty after many jobs have gone permanently in the past 15 months. , etc. In addition, some people earn more from federal and state unemployment assistance. than they did when they were working, taking time before looking for another job. I go.
Some say labor shortages cannot be solved by traditional methods. That is to say, increase wages and offer more generous benefits and working conditions. In fact, the process seems to have started. Average hourly wages increased significantly in April and May.
Consider Gina Schaefer, who owns 13 Ace Hardware stores in Herndon, Va., And Washington, DC, and hires staff quickly for spring and summer when sales are typically high.
Since March, Schaefer has hired nearly 120 people, both seasonal workers and longtime employees on behalf of those who retired last year when COVID devastated the economy. His company pays a minimum hourly wage of $ 15.50 to compete with a large chain that currently pays $ 15, offering health insurance, paid time off, sick leave and 401 (k) plans after employees have worked. for about six months. Make.
“We strongly believe that finding employees in a better workplace is a good thing,” she said.
After months of living at home, millions of consumers have returned home. Energetic and enthusiastic, their finances were bolstered by a $ 1,400 fiscal stimulus earlier this year. The surge in real estate and stock market prices has further increased the desire for consumption among the rich.
Consumer confidence is high. And after the $ 1,400 stimulus to most people made a big profit in March, Americans increased spending again in April.
That said, Rubeela Farooqi, chief US economist at High Frequency Economics, sees warning signs. Confidence and spending are still healthy, but declining. Retail sales surged in March, then stabilized in April. This suggests that the positive effects of the stimulus may have diminished. A similar trend was seen late last year, after the effects of previous federal stimulus began to fade.
Additionally, the Conference Board’s monthly survey of consumer confidence found that expectations for the next six months actually fell in May.
“I don’t know how it’s going,” says Farooqi.
Financial markets took an unfortunate shock last month when the Labor Ministry announced that consumer prices rose 0.8% from March to April and 4.2% from 12 months ago. This is the largest year-over-year increase since 2008.
Some prominent critics, including former Treasury Secretary Larry Summers, risk President Joe Biden’s trillions of dollars in federal stimulus funds causing inflation and forcing the Federal Reserve to resort to rate hikes of interest. Warns that there is sex.
However, Fed Chairman Jerome Powell and many economists say they don’t believe the inflation surge will last long. They say this primarily reflects a temporary supply chain bottleneck that has driven prices up, but it will ease over time. But for now, wood, computer chips and the like. Shortages of materials contribute to inflationary pressures.
Maron of Elmer Schultz Services in Philadelphia said the supply shortage in his industry is so severe that members of the Commercial Food Service Equipment Association trade association are sharing inventory.
“If you have it in stock, you can go to a friend’s house,” he said. “No, I haven’t seen anything like it in my business in the past 30 years.”
The housing market has served as a source of economy and resilience during the pandemic, but it wants to shift to ultra-low interest rate mortgages and more generous deals to meet telecommuting needs. Supported by the needs of many closed families.
However, the housing boom has recently shown signs of fatigue as prices have risen to the point that many cannot afford, and the supply of homes for sale has been severely constrained. Homebuilding fell 9.5% in April, at least in part, because builders postponed the project due to higher costs for lumber and other supplies that helped drive up house prices. . Reported to.
New home sales fell almost 6% in April and purchases of existing homes fell 2.7%. As long as there is a shortage of available housing and selling prices continue to rise, many potential buyers will continue to look outside.
Despite supply chain bottlenecks and labor shortages, American factories are thriving. The Institute for Supply Management’s manufacturing index rose to 61.2. Figures above 50 show growth, with manufacturers gaining for the 12th consecutive month.
Half of buyers surveyed by industrial groups say they have had difficulty finding workers. Given the supply issues, it is not clear whether the plant will be able to maintain stable production. ISM has found that supplier deliveries are progressing at the slowest pace since 1974. Of the 18 industries, 16 reported delivery delays.
AP business editors Christopher Rugerber (Washington) and Joyce M. Rosenberg (New York) contributed to this report.
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