Incentives matter. All of the political grandstanding, media spin and wishful thinking won’t change this basic economic principle.
Both Janet Yellen and Joe Biden insisted “enhanced” unemployment benefits weren’t incentivizing people not to work. But as we recently reported, analysis of continuing unemployment claims after a number of red states cut enhanced benefits undermined this narrative. Now a study by Mercatus Center economists Michael Farren and Christopher M. Kaiser further destroys the ludicrous notion that paying people not to work won’t result in fewer people working.
Economics 101 – incentives matter.
But politicians often seem to forget this. Or simply ignore it. “Generous” unemployment benefits provide the perfect example. With the US government handing out enhanced unemployment checks, we ended up in a bizarre situation with high unemployment even as job openings hit record levels.
We’ve seen a sharp selloff in both gold and silver. Gold was down over $40 an ounce Friday. Meanwhile, the US dollar saw a sharp increase, along with a rise in long-term Treasury yields. The catalyst for these sharp moves was a better-than-expected jobs report and expectation that it will spark a quick pivot to monetary tightening by the Fed. In his podcast, Peter Schiff said the markets are moving on fantasy, not economic reality.
The BLS provides an employment picture of the US on the first Friday of every month. It estimates how many jobs were added or subtracted by sector. While some of the assumptions may be controversial (e.g. the birth/death model) and job numbers are prone to revisions, it remains the most widely anticipated statistic each month by the financial markets. Considering its popularity, the job numbers are heavily analyzed by many sources. This article uses visuals and historical data to provide greater insight and perspective.
This week, the IMF undercut the Fed’s “transitory” inflation narrative, warning about the possibility of sustained inflation in the US. But the real question remains unanswered – what will the Fed do about it? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the options on the table. None of them seem particularly good. That raises another question: how long can the politicians and central bankers keep this thing going?
Despite the addition of a better than expected 850,000 jobs in June, the unemployment rate ticked up to 5.9%, The anticipation was that it would drop to 5.6%. The media spun this as a fantastic jobs report, focusing on the headline number of jobs “created.” Peter Schiff talked about it in his podcast and said it was a weaker report than the headlines would suggest. And the really bad news is unemployment and prices are rising together.
CPI came in much hotter than expected. Fed Vice Chairman Richard Clarida actually said, “We were surprised by higher than expected inflation data.” But should we really be surprised by this? In this episode, Friday Gold Wrap host Mike Maharrey talks about inflation and suggests maybe you shouldn’t be shocked. He also discusses the whacked-out labor market.
America’s labor market is a mess and riddled with incongruency.
On the one hand, businesses can’t find workers. Help wanted signs hang in windows across the country. A McDonald’s franchisee in Tampa is offering bonuses just for showing up for an interview.
Meanwhile, unemployment just ticked up to 6.1%.
In what kind of world does this make sense?
Everybody expected the jobs report last Friday to show a big increase in employment. It didn’t happen.
Instead of the 978,000 new jobs created in April that economists expected, nonfarm payroll increased by just 266,000. On top of that, the Labor Department revised the March number down from 916,000 to 770,000. The unemployment rate ticked up to 6.1%.
As Peter Schiff put it in his podcast, you don’t need a job to spend printed money handed out by the government.