Overall Trend In Employment Is Higher As Businesses Gain Enough Confidence To Hire And Labor Costs Remain Low

Wednesday, September 05, 2012 08:08
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Overall Trend In Employment Is Higher As Businesses Gain Enough Confidence To Hire And Labor Costs Remain Low

Tags: Economic Outlook | economy | Federal Reserve

The long-term slump in the jobs market that Fed chief Ben Bernanke calls an aberration is finally abating. People are going back to work, although they may not be making as much money as they did before the recession. In some cases, their old jobs no longer exist.

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The lower pay has enabled businesses to keep their labor costs low. What wage increases there are have been called anemic. There were 1.5 million fewer people who had been out of work for 27 weeks or longer in July.
 
Job hunters have become less selective and have been happy to take jobs, even if they pay less than workers once earned. The low costs for labor will continue to benefit the jobs market overall, as the economy picks up and employers gain more confidence to hire more people.
 
Job growth combined with low labor costs will also boost earnings, which will in turn boost stock prices. Comparisons over prior years will be easier since earnings have been pummeled by the economy. That will also feed into the stock markets and fuel more confidence and greater economic growth.
 
Low inflation also gives the Fed room to add more stimulus. With the unemployment rate still around twice as high as it should be in a normal economy, the Fed is on watch to take action and boost the fledgling recovery.

 

The downward trend in unemployment is encouraging and the US economy is expected to have added 125,000 jobs during the month of August. The August report will be out on Friday, September 7.

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