Friends, Surprising most analysts and forecasters, employers added a whopping 517,000 jobs in January, according to this morning’s monthly labor report from the Bureau of Labor Statistics. This was almost twice the growth from December’s 260,000 jobs. The unemployment rate fell to 3.4 percent, the lowest since 1969.
In any other time or place, this jobs report would be seen as incredible, hopeful. However, at the head of the Fed, we have a Republican who has been drinking the Kool-Ade (sorry about the reference, but it feels like it is the right one) that workers are expendable and it is only corporations and what they take in that counts. Powell claims it is workers demanding reasonable wages that caused the inflation we are now experiencing. He has in his mind a magical figure of 2% inflation as his goal. He can't possibly know what it would mean to workers and their families to get that rate so quickly after a massive pandemic that killed millions around the world and well over a million in this country, that closed down China for many months, and brought out the strongest corporate greed in generations. I don't know where he got his economics training, but it did not include taking into account all factors when making a decision. Tunnel vision works well for corporations because they can tell that Powel and his crew are going to do little or nothing to stop them and besides, they have accumulated so much profit and bought back so much stock they will be sitting pretty as they say for a long time no matter what happens. And, the workers are interchangeable, aren't they? If unemployment goes up, they will have their pick of workers who will be forced to do whatever they are told at whatever wage the corporation chooses to pay, right? One can't help but wonder if that is just what Powell and his Republican buddies are hoping for.
At a minimum, it should be clear that the Fed demands a serious amount of unemployment in our economy, and if that is our economic policy, then we are obligated to provide a very healthy safety net to support the workers and families who are pushed out of employment.
Thank you for this commentary, Prof. Reich. It is truly perverse for the Feds to hang on to the outdated, harmful premise that the only way to curb inflation is to keep workers unemployed and keep salaries low. Take a look at the UK now!
You can guarantee it will freak the Fed. Their goal is to keep up unemployment and wages down. They have no appreciation for the FACT that inflation is the result of opportunistic price gouging.
Really, their charter needs to be revamped.
No wonder Americans feel screwed by their government.
And let’s not get started about the latest Supreme Court scandal regarding the chief justice’s corruption.
Okay, I fully admit to having no clue about how "the economy" works, other than a woeful generic knowledge. Robert, you've helped me gain a slightly broader understanding. So within that context, am I wrong in saying Jerome Powell is not up to the task? He seems to be a "one trick pony." How does the position of Fed Chair work? Is it a position President Biden can affect? If so, in your opinion, is it time for him make a change? The incessant interest rate increases seem to not be addressing the issue and they're hurting people, exacerbating the impacts of inflation, not helping them. I may be way off base, but any help to gain a better understanding would be greatly appreciated.
I will always remember Roger B. Smith's remarks, in 1986, when he was asked about raising prices on all new models at GM. The country was JUST exiting a terrible recession. He said, "We believe we are charging what the market will bear!" That was when I realized that the commonly understood idea of a fair profit had gone away! Big business began wringing as much out of their respective markets as they could. And not ONE reporter asked, "what about a fair profit!"
I don't think the Fed is a human who can be 'spooked'. This system is set up to keep the workers down. If they really want to stabilize our economy, the very wealthiest would lose their big, fat tax 'breaks' ( why would they need a 'break' from something they rarely or never do?).
Powell is 'crazy like a fox'. Since he is working for those who are gaining all the wealth, there isn't much that does not require raising interest rates. When 'we' default on 'our' loans made by the very wealthy to 'US', who will benefit!? What kind of interest will be made on those loans?
Fund the IRS so they can go after big tax cheats and use the fines to lower the debt. That way the cheats will have less money to fund politicians with dark money and thus decrease their power over federal and state budgets. Tax cuts that lower rates for wealthy people and corporations that then profit off buying federal debt might thus be averted. Doesn't it make your head spin?
The points Robert makes are so blatantly obvious to even a casual observer of the economy and global issues that one is forced to conclude that the Fed only exists to serve the interests of the 1%. Why aren't our elected representatives at the local, state and national level raising hell about this?
Thanks Robert for explaining this in common sense, understandable terms. When I try to explain this, I use terms like ' inelasticity of supply and demand' and people's eyes glaze over.
Powell's approach to inflation is aimed at only one side of the inflation equation - the price of labor. He avoids the other side - monosomy pricing by corporate America. But the evidence that monosomy is a big cause of inflation is right there, in large increases corporate profit margins.
And it would appear that Powell accepts that Corporate America is incapable of expanding production to meet increased demand from consumers who now have more income. He seeks instead to reduce consumer demand by raising interest rates. So Powell's solution is demand destruction - take money away from people so they can't try to buy as much stuff, and viola supply and demand are once again in balance. This is nuts.
Many of the jobs created in recent months have been taken by non-traditional hires such as those of us who had long abandoned looking for work. I am now employed (as of January) after looking for an appropriate role for many years. We need to start tracking people looking for work who are not collecting unemployment like I did FOR YEARS!
Tax The Rich.
In any other time or place, this jobs report would be seen as incredible, hopeful. However, at the head of the Fed, we have a Republican who has been drinking the Kool-Ade (sorry about the reference, but it feels like it is the right one) that workers are expendable and it is only corporations and what they take in that counts. Powell claims it is workers demanding reasonable wages that caused the inflation we are now experiencing. He has in his mind a magical figure of 2% inflation as his goal. He can't possibly know what it would mean to workers and their families to get that rate so quickly after a massive pandemic that killed millions around the world and well over a million in this country, that closed down China for many months, and brought out the strongest corporate greed in generations. I don't know where he got his economics training, but it did not include taking into account all factors when making a decision. Tunnel vision works well for corporations because they can tell that Powel and his crew are going to do little or nothing to stop them and besides, they have accumulated so much profit and bought back so much stock they will be sitting pretty as they say for a long time no matter what happens. And, the workers are interchangeable, aren't they? If unemployment goes up, they will have their pick of workers who will be forced to do whatever they are told at whatever wage the corporation chooses to pay, right? One can't help but wonder if that is just what Powell and his Republican buddies are hoping for.
At a minimum, it should be clear that the Fed demands a serious amount of unemployment in our economy, and if that is our economic policy, then we are obligated to provide a very healthy safety net to support the workers and families who are pushed out of employment.
Thank you for this commentary, Prof. Reich. It is truly perverse for the Feds to hang on to the outdated, harmful premise that the only way to curb inflation is to keep workers unemployed and keep salaries low. Take a look at the UK now!
You can guarantee it will freak the Fed. Their goal is to keep up unemployment and wages down. They have no appreciation for the FACT that inflation is the result of opportunistic price gouging.
Really, their charter needs to be revamped.
No wonder Americans feel screwed by their government.
And let’s not get started about the latest Supreme Court scandal regarding the chief justice’s corruption.
Okay, I fully admit to having no clue about how "the economy" works, other than a woeful generic knowledge. Robert, you've helped me gain a slightly broader understanding. So within that context, am I wrong in saying Jerome Powell is not up to the task? He seems to be a "one trick pony." How does the position of Fed Chair work? Is it a position President Biden can affect? If so, in your opinion, is it time for him make a change? The incessant interest rate increases seem to not be addressing the issue and they're hurting people, exacerbating the impacts of inflation, not helping them. I may be way off base, but any help to gain a better understanding would be greatly appreciated.
I will always remember Roger B. Smith's remarks, in 1986, when he was asked about raising prices on all new models at GM. The country was JUST exiting a terrible recession. He said, "We believe we are charging what the market will bear!" That was when I realized that the commonly understood idea of a fair profit had gone away! Big business began wringing as much out of their respective markets as they could. And not ONE reporter asked, "what about a fair profit!"
The Fed always gives to the corporations and shafts workers. Nothing new, but still. . . 🤬🤬🤬
I don't think the Fed is a human who can be 'spooked'. This system is set up to keep the workers down. If they really want to stabilize our economy, the very wealthiest would lose their big, fat tax 'breaks' ( why would they need a 'break' from something they rarely or never do?).
Powell is 'crazy like a fox'. Since he is working for those who are gaining all the wealth, there isn't much that does not require raising interest rates. When 'we' default on 'our' loans made by the very wealthy to 'US', who will benefit!? What kind of interest will be made on those loans?
Fund the IRS so they can go after big tax cheats and use the fines to lower the debt. That way the cheats will have less money to fund politicians with dark money and thus decrease their power over federal and state budgets. Tax cuts that lower rates for wealthy people and corporations that then profit off buying federal debt might thus be averted. Doesn't it make your head spin?
The points Robert makes are so blatantly obvious to even a casual observer of the economy and global issues that one is forced to conclude that the Fed only exists to serve the interests of the 1%. Why aren't our elected representatives at the local, state and national level raising hell about this?
Thanks Robert for explaining this in common sense, understandable terms. When I try to explain this, I use terms like ' inelasticity of supply and demand' and people's eyes glaze over.
Powell's approach to inflation is aimed at only one side of the inflation equation - the price of labor. He avoids the other side - monosomy pricing by corporate America. But the evidence that monosomy is a big cause of inflation is right there, in large increases corporate profit margins.
And it would appear that Powell accepts that Corporate America is incapable of expanding production to meet increased demand from consumers who now have more income. He seeks instead to reduce consumer demand by raising interest rates. So Powell's solution is demand destruction - take money away from people so they can't try to buy as much stuff, and viola supply and demand are once again in balance. This is nuts.
(Google "Bed of Procrustes")
I wonder how many are people having to get a second job to keep their heads above water......
Many of the jobs created in recent months have been taken by non-traditional hires such as those of us who had long abandoned looking for work. I am now employed (as of January) after looking for an appropriate role for many years. We need to start tracking people looking for work who are not collecting unemployment like I did FOR YEARS!
Does anyone track profit margins?