Stimulus Update: More Positive Signs for the U.S. Labor Market
- There were 239,000 private sector jobs added in October.
- Annual wages rose 7.7%.
Inflation may be soaring, but job growth is holding steady.
Inflation has been battering consumers since 2021, and over the past 18 months or so, many people have had to raid their savings accounts or rack up debt on their credit cards just to cover their basic needs. It's for this reason that so many Americans are frustrated by a lack of federal stimulus aid.
Though some states did step up this year by issuing stimulus payments to residents, the federal government has not approved a stimulus round in 2022. In fact, the last round of stimulus checks to hit Americans' bank accounts was authorized back in March of 2021 as part of the massive American Rescue Plan.
But while it's easy to see how a stimulus check could bail a lot of people out these days, the reality is that stimulus rounds only tend to come into play during periods of widespread unemployment. And right now, that's just not the situation we're in.
Job growth soared in October
ADP recently released its October jobs report based on payroll data from more than 25 million U.S. employers, and it found that 239,000 private sector jobs were added in October. Not only that, but wages rose 7.7%. on an annual basis.
Now that 7.7% is a bit below the most recent inflation reading from the Consumer Price Index, but it represents sizable wage growth nonetheless.
Meanwhile, the most job growth in October occurred in medium-sized businesses, which added 218,000 new jobs. Small businesses added 25,000 new jobs, and large companies actually shed 4,000 jobs.
A near-term stimulus round is unlikely
In the past, lawmakers have approved stimulus funding during periods of high unemployment. But right now, the labor market is holding steady and strong. And because of that, a near-term stimulus round is probably off the table.
In fact, it's easy to make the argument that a round of stimulus checks could worsen the problem of inflation. A big reason living costs are so much higher these days is that consumers found themselves with extra cash on hand thanks to stimulus policies last year at a time when supply chains had slowed down. That created an excess of demand relative to supply -- a scenario that commonly drives prices upward.
At this point, many supply chains have managed to ramp up, but until the gap between supply and demand is bridged, inflation could continue to soar. And pumping stimulus funds into Americans' wallets isn't the solution to the problem at hand.
Of course, if a recession hits in 2023, which many economists and financial experts are predicting, then it could result in a notable uptick in unemployment. At that point, it's fair to say that lawmakers would likely consider a stimulus round since that's a practice that's been employed in the past. But for now, consumers will need to come to terms with the fact that there won't be a stimulus check coming their way in 2022 -- and do their best to stay afloat until inflation levels start to shrink.
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