Saturday, October 23, 2021

JPMorgan Predicts Weak Jobs Recovery as Fed Officials Move Around Mulls Policy Stimulus

The JPMorgan model for predicting job creation in the US economy predicts another weak number for September, on the back of a reduction in consumer spending in sectors such as travel and leisure.

The predictive model, created by the bank’s quantitative research team, estimates September’s non-farm payroll numbers to come in at 333,000. While that would be more than the 235,000 jobs added in August, it would make September the second month of weak labor market data after US employers added 1.05 million jobs in July.

The JPMorgan model, which incorporates alternative data sources used by the Labor Department in its monthly non-farm payrolls report, came in close to the bulk of other estimates in August’s disappointing job creation figure of 235,000. The bank estimated 353,000 jobs would be added in August, while, for example, a Reuters poll of 80 economists came up with an average forecast of 728,000 — overshooting the actual figure by more than a factor of three.

JPMorgan’s latest estimate is down about a quarter million from two weeks ago and tracks the decline in consumer outlays on things like airline travel and restaurants based on Chase credit card usage data. The most recent retail sales report from the Census Bureau showed that after climbing 1.3 percent in July, spending at bars and restaurants remained flat in August, possibly reflecting greater consumer caution amid reports of rising COVID-19 infections.

While the Labor Department’s closely watched non-farm payrolls report for September isn’t due until October 3, labor market data is now in focus as Federal Reserve officials consider the state of the economy on September 21-22. The day meeting has been called and related policy adjustments.

Labor market reforms are a key criterion for the Fed in deciding whether to pull back on stimulus. While the US economy posted a record 10.9 million jobs, the economy is down by about 5 million jobs compared to the pre-pandemic period and about 8.4 million Americans are still unemployed.

“The Fed has repeatedly emphasized two things – they want to see more corrections in the labor market and they expect inflation to be temporary. Job growth disappointed in August and their ‘transient’ in inflation data. ‘ There’s a lot to support the thesis, so any announcements about tapering bond purchases will wait until November, with a possible December start,” Bankrate’s chief financial analyst Greg McBride told The Epoch Times in a statement. Emailed statement.

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While Fed officials acknowledge inflation to be warmer than expected, they believe it to be a transitory event driven largely by supply chain disruptions related to the pandemic that will eventually end and inflation. would bring the rate back to around the Fed’s 2 percent target.

The Fed’s bond-buying program, with the benchmark interest rate dropping to near zero, has fueled economic recovery and upbeat markets, contributing to inflationary pressures.

Speaking at an economic symposium in Jackson Hole, Wyoming in late August, Federal Reserve Chairman Jerome Powell acknowledged a “sharp rise in inflation”, although indicated that upward pressure was easing. At the same time, he said in a softer tone, the central bank will continue to buy bonds at the current pace until we see “significant further progress” toward the Fed’s twin goals of price stability and maximum employment.

Powell noted that “considerable forward progress” testing for inflation had been completed and “clear progress” toward the maximum employment objective, but a caution around labor market reform in the face of the rising CCP (Communist Party of China). Hit the voice virus infection.

A key issue before Federal Reserve officials over the next two days will be the formulation of a new assessment of labor market recovery, with implications for calibrating policy.

“Soft economic data and a lower-than-expected rise in consumer prices give the Fed the ability to postpone any announcements on asset purchases. Expect them to head down the road to a November meeting, giving them a monthly economic release. to better see the strength of the economic rebound in the face of the ongoing pandemic,” McBride said.

Reuters contributed to this report.

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Tom Ozimek has an extensive background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s heard from Roy Peter Clark: ‘Hit your goal’ and ‘Leave the best for last.’

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This News Originally From – The Epoch Times

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