April jobs report has some 'good news' for the Fed: Economist

The April employment report was cooler than economists had been expecting, with the US adding 175,000 jobs compared to the estimated 240,000.
Citi Senior Global Economist Robert Sockin and State Street Global Markets Senior Global Multi-Asset Strategist Dan Gerard join Morning Brief to discuss the April report.
Sockin notes that the unemployment rate remains at a relatively low level, despite rising to 3.9% in April. The United States added fewer jobs than predicted and wage growth slowed, which Sockin explains may be indicative of "a moderating job market rather than a job market that's falling off a cliff" and could be "good news" for the Federal Reserve.
Gerard notes that the jobs report is still "a pretty decent number given where rates are," especially as post-pandemic normalization is still underway.
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[@Marques127]

Why is unemployment a good thing? Im confused, how do the markets like 'high unemployment'?

[@jfarm30]

In this case the market will take it as a good thing because it signals inflation is continue to moderate. If inflation moderates we get interest rate cuts. Low interests is good for borrowing money which is good for business. Now.if we loose to many jobs that’s bad for business also

[@PeterParker-wj3cr]

First is understanding why rates need to be hiked or reduced at all. Anytime the Fed has to lower or raise rates. It's in reaction to a problem that needs to be fixed. When the Fed raises rates its to fix out of control inflation. Lowering rates is to fix a slowing economy by helping stimulate growth. The Fed won't just lower rates because investors want them to. So why higher unemployment is "good"? It would signal a slowly economy. The more people are out of work. The less money you will have to spend. Which then will impact corporate sales and revenue...etc

[@royjays4588]

@@PeterParker-wj3cr No, it is not that simple. It is much more complicated. Inflation can come down even if there are more jobs and higher salaries. That is actually what has been happening in the last year.

[@PeterParker-wj3cr]

@@royjays4588 Yes its way more complicated. Which is why i provided a reductive response. No need to get into a lecture in the comment section on youtube.

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[@marcuscook5145]

This is only good news for the fed if April inflation comes in lower than expected. If it comes in higher than expected despite a slowing economy like the last report or two, than its actually really really bad for the fed, because we could be in for an inflationary recession or at least very slow growth with high inflation. Given the way the government spends, it's very possible this is what ends up happening.

[@ace9840]

Weird because I see stores closing everywhere.

[@Willfully_Ignorant]

Wait, so we’re back to 1 report equals a trend again? Huh, funny how that works when it favors what you want to happen.

[@KippinCollars]

Unemployment rate is 3.9% which is still super good by historical standards. To give some perspective, in the late 90's boom, unemployment rate bottomed at 4% - this was when everyone and their brother could easily find work. We've been below 4% for years. Sure, there's only up from here, but overall the economy is strong. 2019 Unemployment rate was 3.5%. If we adjust, and unemployment rises the same % as it did in the late 90's, then we'll get to 5.25% unemployment in 2025 or so. I don't think those numbers justify a return to ZIRP and QE to infinity.

[@unaldurmaz250]

FED better off hiking the rate but they'll keep same as previous

[@xiphoid2011]

Unemployment need to go up to the historical average range of 4.5-5.5% and wage increase need to come down to 3% before consummer spending stop driving the inflation higher. It's not rocket science to know when almost everyone is able to get a job, and jobs are paying averaging 4.2% wage increases, rhe consumer spending is going to go up 4% a year, pushing inflation to be close to 4%. I mean, i got a 4% raise last 2 years, of course I spend that much more (even though I kept my savings rate constant).

[@royjays4588]

I don' think it's so easy. Inflation hast to do a lot with psychology and of course competition. If you can choose between two burger places that offer the same burger, but one is cheaper, you will go to the cheaper place, regardless of whether they have just incresed you salary or not.

[@alexdasliebe5391]

Inflation is worldwide and profits and the S&P continue to rise. Prices going up is also inflation and here it is greedflation.

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Everyone looking for rate cuts 😅😂😅😂. We need more hikes to end the Ponzi scheme

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[@honkhonkler7732]

​@@BrandonClark-StocksPassports Wait for the inflation report. If it keeps looking stagflationary, the fed may be stuck.

[@marcuscook5145]

If inflation comes in hotter than expected despite a slower economy like last month's report, the fed is stuck and we're probably in for some very nasty stagflation.

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[@simpiwemaqwara2184]

It's too early to expect rates cuts based on this weak jobs report

[@dewaynewalker2104]

This will likely give cover for the vegetable in the White House (a.k.a. the big guy) to order the supposed independent Fed to lower rates for political needs.

[@unaldurmaz250]

FED has to raise rates your analysis is complete opposite 😂

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