Labor market strong, but inflation still an issue for consumers - Albuquerque Journal

Labor market strong, but inflation still an issue for consumers

Nick Sly

Copyright © 2022 Albuquerque Journal

Economic growth and labor market conditions are strong but consumers are still feeling the pain of inflation, particularly households and businesses.

That’s according to Nick Sly, an economist and Denver branch executive for the Federal Reserve Bank of Kansas City, who presented to a group of business leaders from across the state at the Economic Forum of Albuquerque on Wednesday.

“As the pandemic persisted, as economic conditions really started to develop, you saw that the inflation pressures were broadening,” Sly said. “And then you got to this spring – where although there was on the horizon some indication that some those inflation pressures would start to moderate – you had a conflict in eastern Europe that roiled global commodity markets. … I think that has renewed some of the pressures we see.”

Inflation has reached a 40-year high. Over a 12-month period, the Consumer Price Index – which measures consumer goods, including food and energy – rose to about 8.5% before seasonal adjustment.

And the high inflation has translated to a “depressed” consumer sentiment – with the number for March 2022 coming in lower than during the early months of the pandemic.

“Despite the fact that wages are growing and folks seem to be spending, many measures of consumer sentiment seem to be quite depressed,” Sly said. “I think that tells you a lot about the risk and the challenges, or even sometimes the uncertainty that comes with higher inflation for households and how they might approach trying to manage through that.”

But Sly said inflation pressures look to be moderating in some areas. The prices of used cars have fell 3.8% in March, according to the CPI.

Market conditions

Sly said consumer spending on goods is actually higher than the trend pre-pandemic despite the rise in inflation. That’s due to strong labor market conditions – from robust payroll growth and wage gains to the economic stimulus payments people received from the federal government.

Unemployment has also fallen quickly from highs during the pandemic. Right now, the national unemployment rate stands at about 3.6%, and locally, the unemployment rate is at about 5.6%, according to data from the U.S. Bureau of Labor Statistics.

The labor force participation rate – “the willingness of workers to actually supply their labor to businesses,” he said – hasn’t fully recovered nationally or in New Mexico.

But that is caused by the number of jobs available to job seekers. Nationally, there are about 1.7 jobs available to every one job seeker. In New Mexico, that rate is a bit lower but still follows that trend nationwide.

“When I see the strength of the labor market (and) the recovery in unemployment, I think a key factor of how much tightness, or how much strength there is in that labor market, has been the job opening relative to the amount of folks seeking work,” Sly said.

The number of jobs available gives workers more opportunity to seek outside employment, additional jobs, or those that may suit their personal needs. That can lead to higher productivity – which, in turn, can lead to higher wages.

Looking ahead

Looking at the overall economy, Sly said strong labor market conditions are expected to continue which will lead to consumer growth. Inflation in some places is likely to moderate over the coming months but may continue to spread in other areas with global developments.

“I think the challenge is going to be what is the appropriate pace of removing policy? What’s the appropriate adjustment of monetary policy knowing that the steps it takes today really don’t impact economic outcomes – don’t affect pricing outcomes – until six, 12, 18 months down the line,” Sly said.

 

Home » ABQnews Seeker » Labor market strong, but inflation still an issue for consumers


Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email yourstory@abqjournal.com

taboola desktop

1
APD hopes to expand its Digital Intelligence Team
ABQnews Seeker
The Albuquerque Police Department hopes to ... The Albuquerque Police Department hopes to more than double its unit devoted to helping solve violent crimes through online sleuthing. The three-person Digital Intelligence ...
2
Supreme Court: Biden can end Trump-era asylum policy
ABQnews Seeker
The Supreme Court said Thursday the ... The Supreme Court said Thursday the Biden administration can scrap a Trump-era immigration policy to make asylum-seekers wait in Mexico for hearings in U.S. ...
3
Supreme Court petition seeks probe of Trump campaign attorneys
ABQnews Seeker
The attorneys who filed a last-ditch ... The attorneys who filed a last-ditch lawsuit on behalf of President Donald Trump's campaign in an attempt to stop New Mexico's 2020 election results ...
4
Fish and Wildlife changes Mexican wolf management
ABQnews Seeker
The U.S. Fish and Wildlife Service ... The U.S. Fish and Wildlife Service on Thursday finalized rules that change how the federal agency manages the endangered Mexican gray wolf.   The changes ...
5
Supreme Court limits EPA in curbing power plant emissions
ABQnews Seeker
In a blow to the fight ... In a blow to the fight against climate change, the Supreme Court on Thursday limited how the nation's main anti-air pollution law can be ...
6
PRC orders customer rate credit for San Juan shutdown
ABQnews Seeker
PNM accused of trying to 'cheat' ... PNM accused of trying to 'cheat' customers out of coal-plant savings
7
Developer plans shipping container food hall for Rio Rancho
ABQnews Seeker
Margarita Hill will have eight tenants, ... Margarita Hill will have eight tenants, with a focus on local vendors, and incorporate green space
8
Initial round of rebate checks sent to NM taxpayers
ABQnews Seeker
Relief aims to target inflation, gas ... Relief aims to target inflation, gas prices
9
Rep. Louis agrees to plea deal in DWI case
ABQnews Seeker
Other charges dropped after proof of ... Other charges dropped after proof of insurance, registration provided