Fed Finale: What To Expect From 2022’s Last Meeting
This time last year, the Fed was busy disavowing "transitory" as a description of the inflation percolating in the US economy.
Headline CPI, which loitered harmlessly just above 1% in December of 2020, was up to almost 7% and calls for the Fed to do something (anything, really) were becoming more urgent virtually by the day.
Two weeks after telling US lawmakers that the "T word" was, like so many former members of the labor force, headed for early retirement, the Fed dropped "transitory" from
Short of calling them liars, I personally believe there are things that Fed chair can and cannot say even if he sees it as a likely outcome. Everything is sugar coated for safe consumptions.
i.e. Windows for soft landing is narrowing (hard); Some pain (lots of it); Keeping at it (Volcker hike)
The number of legal immigrants into the US is projected to be just over 1M in 2022- which is slightly higher than annual immigration rate pre-covid. If there truly are 10M job openings and only 6M job seekers in the US, it is going to take a few years for immigration to fill the job openings gap- but if immigration continues on a similar track, there should be significant progress made in 2023 and every year thereafter.
It seems unlikely that the labor participation rate will recover back to the pre-covid level of 63% from the current level of 62%- which roughly translates to a loss of 2.0-2.5M workers.
I remain hopeful for an updated immigration policy – however, 1M/year is better than I realized. Most legal immigrants are from Mexico (24%) followed by India (6%). Typically, immigrants are more willing to take the jobs that existing US workers do not want to do (eg- service industry).
I can’t help but roll my eyes at the notion that the Fed thinks it’s bad when labor is finally getting its long overdue pay increases and that it must use its power to fight that. But when corporate profits are through the roof, that’s fine? You want to know where the bias towards making the rich richer lies, look no further.
I suffer from the same affliction… even though my own income is now, in retirement, more tied to corporate profits than to improvements for labor.