Goss: Even with unemployment up, labor market still tight

NICK GOSNELL

Hutch Post

HUTCHINSON, Kan. — Employers added 339,000 jobs in May, according to the monthly employment report from the Bureau of Labor Statistics released on Friday.

Creighton University economist Ernie Goss notes that the labor market remains tight.

"Employers are having to pay up to keep workers," Goss said. "They don't want to let them go, because once you let them go, you may not get them back. Also, there still is some COVID-19 spending out there, the two stimulus packages and then the Biden inflation and deficit reduction act. All that has put money out there and encouraged individuals to not be in the workforce. They don't show up in unemployment, but they don't show up in employment, either."

The Federal Reserve meets in less than two weeks to decide whether to raise interest rates again or to pause.

"I expect them to move to the sidelines on June 13 and 14 when they meet again," Goss said. "I still expect a rate hike later in their meetings ahead. I think this is just one pause. We'll see more rate hikes. I expect the prime interest rate, which is now eight and a quarter to move close to nine percentage points. That, of course, is going to slow the economy down."

Goss sees inflation as something that still may need a little slowing.

"Inflation right now is running at least double what the Federal Reserve wants it to," Goss said. "The Federal Reserve's target is two percent. We're more than double that, in terms of the U.S. We also see it in our survey region. This, of course, is wholesale inflation here. It's still running too high. The supply managers, when they looked ahead, they did see a decline. They expect a decline in wholesale inflation."

The overall shortage of workers has caused inventories among Kansas supply managers in particular to be down, as they need people to make the items to have them in reserve. Kansas Business Conditions Index for May dropped to 43.1 from April's 49.7. Anything below 50 is below growth neutral.

CLICK HERE to download the Hutch Post mobile app.

CLICK HERE to sign up for the daily Hutch Post email news update.