Increasing wealth inequality, drives prices inflation, wage stagnation and less disposable income, driving less consumption, driving less revenue for businesses, meaning cuts happen and hiring freezes, drives slowing growth in new job market.
I think you've got your cause/effect chain a little muddled. I would also assert that the system dynamics are neither linear nor singular in the way you frame it.
I hate to tell you, the single cause of inflation is not "wealth inequality", it's extra dollars spent by the Federal Government that literally don't exist.
The US Government writes checks that always cash, and unlike you and me, they don't have to have anything in the bank account behind it. This is the _sole and only_ cause of inflation. _Its the literal definition_ and is well documented.
>Currently, the data suggest that reduced labor supply is likely the key driver
It's interesting as far as people I know looking for jobs, they're supply ... and having a hard time finding jobs. Reduced supply you'd hope you'd get a job.
Granted the article addresses this both in the types of jobs and:
>The stability of the unemployment rate masks effects of the low-hiring, low-firing labor market.
I do wonder, if this continues and a sense of economic slowdown or worse continues, would lowering a rate really fire up hiring? I know small businesses who can't eat /dance around tariffs like big companies, some are seriously terrified / facing hard decisions, others fine.
Yeah, anecdotally no one I know exemplifies that finding. Everyone who had had to job search ran into a ton of competition and either beat them all out or is under-/unemployed currently. Only way I could see the finding of reduced labor supply is that no one can afford to work in the low wage jobs that are open.
I can see one way in which it could be true that the labor supply is reduced, in specific sectors:
The ICE crackdowns are both directly removing large numbers of nonwhite people from the labor pool, and indirectly scaring much larger numbers of them away from it, lest they be the next ones sent to the camps.
Aside from that, though? No, I think talking about reduced labor supply is anti-labor propaganda at best.
My read on this is most jobs growth in raw numbers occurs in the lower pay brackets. In those pay brackets supply has decreased and the people doing the hiring have not raised wages. This means these jobs aren't being filled and the work isn't getting done. This leads to lower jobs numbers and keeps unemployment rates stable.
Title is clickbait (we all know why) but its a great read. Its so many shocks to the economy at the same time, and with no goal other than to cause harm that I don't think anything the FED does will have any real impact in the real world.
The author goes for an OR between reasons but I really don't see it like that, its an AND, all jumbled together and pushing the economy down.
It definitely feels like many companies have simply given up trying to do anything new. I mean look at the blowback against renewables that happened this election cycle, possibly killing the IRA. Why take risks when you’re making a ton of money just keeping the lights on?
"The employment statistics are broadly consistent with the reduction in immigrant labor supply. Job growth has slowed more this year in industries that have a higher fraction of unauthorized immigrants like construction and restaurants, according to analysis by Jed Kolko at the Petersen Institute."
...I feel like the article answers its own question pretty well. I guess the headline is there for SEO/"engagement".
I think it's a moot point. We've been trying to increase the number of jobs and the amount that jobs pay for most of modern history. And since when has that ever worked? well it worked until about the 70s and then we roughly flat line for about 30 years and since 98, its been nothing but down hill from there (if you dought this, calculate the standard of living: nominal gdp per capita or median wages / case-shiller housing index). by all means try but it's not going to work.
There's two sides to personal finance: what you earn and what you spend. earning more, on a wholistic countrywide scale, simply isn't possible anymore (if the last 50 years has taught us anything).
The answer lies in allowing the economy to make life more cost effective (removing regulations that force housing costs to be high, making more land available for living, thus driving down it's costs, etc.). The answer lies in controlling costs and spending, both in the personal life and for government.
Not mentioned in the summary at the bottom: crippling inflation. This is the result of policies (Both Red and Blue) put into motion 4-5 years ago. Businesses run on razor thin margins, and when your purchasing power is suddenly reduced 25%, well this result is predictable.
World already changed in 2024 (covid era ends, AI era begins, huge trade dis-balance of US actual for many decades, and new administration want to resolve it), but employers not release changed reality immediately (even when plans of conservatives was known in November).
Looks like now they slam on the brakes, and first cut new projects and now trying to build new approach.
And looks like, tip point was when president Trump demonstrated tables with new import tariffs.
What I mean, even when Apple, TSMC and other tech giants already said about huge investments, but they first stopped many already running projects and will spend at least few months before start new jobs (to be exact, on big projects, from budget decision to start hire, usually spend ~1-2 months).
What worsened things, some infrastructure giants are not in good shape (Intel, IBM, Ford), so, probably their tops will spend additional time to negotiate with investors new terms.
Deport + limit immigration = degrowth = of course job growth would slow, maybe even turn negative. Perhaps there's this alternative scenario world where pressed Americans start working jobs illegals work, aka the jobs allegedly Americans won't. But Americans are too soft / have too much dignity / employers haven't increased wage (whatever interpretation you wish) for that to happen.
Because the tariffs are raising the cost of goods for both businesses and consumers so business costs go up while sales go down. Meaning businesses can’t afford to hire.
People who actually understand economics have been predicting this for months.
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[ 4.7 ms ] story [ 60.6 ms ] thread> Increasing wealth inequality, drives prices inflation
How does increasing wealth inequality drive price increases?
Why?
How much does a bottle of water cost?
- Supermarket? - Festival? - In a drought, when you're standing in line behind a thirsty billionaire?
People with a large relative net worths, drive asset prices up, like bids in an auction - even if they aren't the final bidder.
The US Government writes checks that always cash, and unlike you and me, they don't have to have anything in the bank account behind it. This is the _sole and only_ cause of inflation. _Its the literal definition_ and is well documented.
It's interesting as far as people I know looking for jobs, they're supply ... and having a hard time finding jobs. Reduced supply you'd hope you'd get a job.
Granted the article addresses this both in the types of jobs and:
>The stability of the unemployment rate masks effects of the low-hiring, low-firing labor market.
I do wonder, if this continues and a sense of economic slowdown or worse continues, would lowering a rate really fire up hiring? I know small businesses who can't eat /dance around tariffs like big companies, some are seriously terrified / facing hard decisions, others fine.
The ICE crackdowns are both directly removing large numbers of nonwhite people from the labor pool, and indirectly scaring much larger numbers of them away from it, lest they be the next ones sent to the camps.
Aside from that, though? No, I think talking about reduced labor supply is anti-labor propaganda at best.
But funny enough, we can't just ship 100k software developers from the bay to the central valley and it just work.
The author goes for an OR between reasons but I really don't see it like that, its an AND, all jumbled together and pushing the economy down.
https://paulkrugman.substack.com/p/its-beginning-to-smell-a-...
He's obviously got a political angle, but doesn't let that completely color his economic analysis.
"The employment statistics are broadly consistent with the reduction in immigrant labor supply. Job growth has slowed more this year in industries that have a higher fraction of unauthorized immigrants like construction and restaurants, according to analysis by Jed Kolko at the Petersen Institute."
...I feel like the article answers its own question pretty well. I guess the headline is there for SEO/"engagement".
There's two sides to personal finance: what you earn and what you spend. earning more, on a wholistic countrywide scale, simply isn't possible anymore (if the last 50 years has taught us anything).
The answer lies in allowing the economy to make life more cost effective (removing regulations that force housing costs to be high, making more land available for living, thus driving down it's costs, etc.). The answer lies in controlling costs and spending, both in the personal life and for government.
Any Intelligent
American Indvidual
'Ad Ideas
Looks like now they slam on the brakes, and first cut new projects and now trying to build new approach.
And looks like, tip point was when president Trump demonstrated tables with new import tariffs.
What I mean, even when Apple, TSMC and other tech giants already said about huge investments, but they first stopped many already running projects and will spend at least few months before start new jobs (to be exact, on big projects, from budget decision to start hire, usually spend ~1-2 months).
What worsened things, some infrastructure giants are not in good shape (Intel, IBM, Ford), so, probably their tops will spend additional time to negotiate with investors new terms.