Written by Dr. Michelle Leonard, Chief Economist and Data Scientist, and Riley Conlon, Research Analyst, Triple-I
US employment remains more resilient than expected given monetary tightening, adding 253,000 jobs in April, and pushing unemployment to 3.4% in April compared to 3.5% in March.
Job growth has been positive over the past 26 months, as the US economy has now replaced most of the jobs lost at the start of the pandemic. recruitment for Insurance companies and related activities The sub-sector specifically continues to outpace the broader US employment. The unemployment rate in the insurance sector was 1.6 percent in April, up from 1.5 percent in March.
Employment flexibility and the current historically low unemployment rate are likely to increase the pressure that inflation hawks are putting on the Fed to not only keep increasing rates but to make each rate hike bigger. Based on the Triple-I model, the pre-COVID actual employment and forward trend spread, which has been narrowing since the end of the pandemic, is likely to stabilize at its current level.
In line with these expectations and our conversations with policymakers, we believe that the Fed’s stronger-than-expected April jobs performance is unlikely to accelerate the current pace of monetary tightening; However, it may increase the duration of an existing flare-up cycle.
Employment in the United States was firmly in the growth trend pre-COVID. This shows great resilience under monetary tightening. Expect the Fed to continue its “slow and steady race win,” though calls for “monetary shock and awe” will likely only grow stronger.
