Rising wages are doing more good than bad, Fed’s Powell says

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  • Rising wages aren’t contributing to decade-high inflation, Fed Chair Jerome Powell said Wednesday.
  • Today’s trend is different and healthier than the wage-price spiral of the 1970s, he added.
  • The comments echo remarks from President Joe Biden, who’s repeatedly praised the jump in worker pay.
  • See more stories on Insider’s business page.

Wages are rising, but not to a degree that should concern economists, Federal Reserve Chair Jerome Powell said Wednesday.

The months-long labor shortage has prompted some businesses to raise wages as they scramble to rehire. Average hourly earnings rose at an unusually fast pace through spring, and healthy job creation in sectors with the largest pay bumps suggests the raises are working.

Yet the increases have raised some concerns around how higher pay might boost inflation. Price growth hit the fastest pace since April 2008 last month, reflecting dire supply shortages and overwhelming demand in the US economy. Higher pay could further accelerate inflation by lifting consumer spending and leading companies to charge more.

Such a process can occur, but it’s not what the economy is experiencing today, Powell said in a press conference following the Federal Open Market Committee’s July meeting. The US faced a wage-price spiral in the Great Inflation of the 1970s as companies used higher prices to offset rising labor costs. Since wages have steadily risen alongside broader price growth, the current trend is more healthy than concerning, the Fed chair said.

“Wages moving across the spectrum consistent with inflation and productivity is a good thing,” he added.

The FOMC elected to hold interest rates near zero and maintain asset purchases of at least $120 billion per month. Powell hinted that participants discussed plans to taper the purchases, but gave little indication of when action would take place.

To be sure, the jump in wages is easily outpaced by the inflation uptick. On net, average pay has declined due to broadly higher prices. Minimum wage workers who haven’t benefitted from the jump are the poorest they’ve been in decades.

Economists also expect the leap in wages to be a one-off. It’s unlikely businesses will factor higher inflation into their wage-setting plans for next year, Gregory Daco, chief US economist at Oxford Economics, said in June. The increase is more a “one-time releveling of low wages” than a permanent shift in workers’ bargaining power, he added.

That hasn’t stopped policymakers from cheering the gains so far. Labor Secretary Marty Walsh said earlier in July that the administration isn’t worried at all about higher pay adding to inflation.

“I think steady wage growth is good for workers. The one thing that we are not concerned about is … inflation,” Walsh told Insider. “We’re still in transition, so we’re not concerned about that. So I think anytime we can push for higher wages – and the president’s been very vocal on this – that’s a good thing for people.”

President Joe Biden made similar remarks in June, saying employers should simply “pay [workers] more!” if they were struggling with the labor shortage. The pay hikes are a result of employees having a stronger bargaining chip now, he added.

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US stocks trade mixed as Powell says economy is making progress

Jerome Powell
Jerome Powell

  • US stocks closed mixed on Wednesday after Fed Chairman Jerome Powell said the economy is making progress towards it tapering standards.
  • Despite the economic progress, Powell said the Fed is not yet ready to begin tapering its monthly bond purchases.
  • Investors were also digesting earnings results from mega-cap tech companies like Apple, Alphabet, and Microsoft.
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US stocks were mixed on Wednesday, with the S&P 500 and Nasdaq 100 rising following comments from Federal Reserve Chairman Jerome Powell.

Powell said the economy is beginning to make progress towards it standards that would trigger the Fed to begin tapering its monthly bond purchases, but that the economy is not yet fully there. The Fed will continue its monthly bond purchases of $120 billion.

Investors were also digesting strong earnings results from mega-cap tech companies like Apple, Alphabet, and Microsoft.

All three tech giants easily surpassed analyst’s revenue and EPS estimates, helping boost shares of Microsoft and Alphabet in trades on Wednesday. Apple traded slightly lower as investors questioned if Apple’s strong growth rates were sustainable.

Here’s where US indexes stood after the 4:00 p.m. ET close on Wednesday:

The strong moves in US tech companies are in stark comparison to Chinese tech stocks, which continue to sell off as increased regulation from Beijing spreads to various industries. Cathie Wood’s Ark Invest continued to sell off their stakes in Chinese tech companies on Tuesday.

Robinhood’s expected IPO later this week will not be bought by some large asset managers, as they are reportedly going to sit out the offering in fear of retail-driven volatility. The retail brokerage app is now testing a new feature that will let users invest their spare change into select stocks.

Crypto-exchange Binance said it will step up its compliance efforts, including data-sharing with regulators and implementing a tax-tracking tool. The company has come under fire from a number of jurisdictions for its lack of compliance safeguards.

Crypto bull Mike Novogratz criticized Senator Elizabeth Warren’s anti-crypto stance on Tuesday, saying that DeFi is far more transparent than banks. Warren had sent a letter to Treasury Secretary Janet Yellen calling for tougher rules on cryptocurrencies.

Oil prices were higher. West Texas Intermediate crude was up as much as 0.66%, to $72.12 per barrel. Brent crude, oil’s international benchmark, jumped as much as 0.54%, to $74.88 per barrel.

Gold was up 0.34%, to $1,805.90 per ounce.

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The adoption of central bank digital currencies is ‘inevitable’ – though the US still has 2 problems to overcome, says Bank of America

The Eccles Building, location of the Board of Governors of the Federal Reserve System and of the Federal Open Market Committee, June 2, 2016 in Washington, DC.
The Eccles Building

  • The adoption of central bank digital currencies is “inevitable”, according to Bank of America.
  • However, the US needs to solve two problems: how to include unbanked Americans and dealing with retail transfers across borders.
  • “Central banks have the power and the will to prevent a very bad outcome,” the analysts said.
  • See more stories on Insider’s business page.

The adoption of central bank digital currencies is “inevitable” due to numerous apparent advantages, according to Bank of America, though the US still needs to overcome several challenges before there can be an effective rollout of a digital dollar.

Among the many upsides of well-designed CBDCs, according to economist Ethan Harris and currency strategist Athanasios Vamvakidisthere, one stands out: their almost instantaneous transactions at minimal costs no matter where in the world.

This was highlighted during the pandemic when stimulus payments went out to the bank accounts of millions of struggling Americans. A transfer via check would have been too slow while one via credit card would have been too costly.

Still, the US must overcome two problems before a CBDC can be successfully rolled out, according BofA analysts.

First, it must figure out how to include around 5% of American households that do not have bank accounts and the roughly 21% that do not have credit or charge cards. Once the US has its CBDC, these individuals could be locked out of participating.

Second, it must work out if “digital wallets” are indeed the answer to expensive retail transfers across borders, especially with 3% of the adult population in the US not owning cell phones and 15% not owning smartphones.

Still, central banks will likely be moving along two tracks going forward, the analysts said, which are improving the current payment system and developing new methods of payment.

“Central banks have the power and the will to prevent a very bad outcome,” the analysts said. “They are not going to throw the baby out with the bathwater, but will retain control of the payments system and minimize the disruption to the flow of credit.”

The analysts also said they are concerned that if CBDCs for major currencies are available internationally, these could “erode the monetary sovereignty of smaller countries.”

After all, CBDCs, particularly one backed by the US, in some ways are superior to bank accounts as a store of value, particularly during times of crisis, they said.

CBDC is a type of central bank liability – similar to the US dollar – issued in digital form, which could be used by the general public. It will have the full backing of the central bank although could be managed by designated private financial institutions.

Around 56 central banks are developing or considering digital currencies, according to the Bank for International Settlements, with China leading the race as it gradually rolls out its e-RMB.

The Fed for its part in May revealed that it has taken further steps in exploring a digital currency and will be releasing a discussion paper this summer outlining its thinking on digital payments.

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There is a fundamental misunderstanding of inflation and its spread throughout sectors of the economy proves it is not isolated or transitory, Mohamed El-Erian says

Mohamed El-Erian, Chief Economic Adviser of Allianz appears on a segment of "Mornings With Maria" with Maria Bartiromo on the FOX Business Network on April 29, 2016 in New York City.
Mohamed El-Erian.

  • Mohamed El-Erian said there is a fundamental misunderstanding of inflation because few people have lived through it.
  • “I always laugh when people say, oh, it’s isolated, it’s transitory,” El-Erian told CNBC on Monday.
  • He also disagreed with the Federal Reserve’s view that inflation is transitory.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell

Economist Mohamed El-Erian in an interview Monday took aim at assessments of inflation that describe rising prices as “transitory,” stating that there is a fundamental misunderstanding of what inflation is and how it is already spreading throughout the economy.

“I always laugh when people say, oh, it’s isolated, it’s transitory,” Allianz’s chief economic adviser told CNBC. “I think there’s a fundamental misunderstanding about inflation today because … most people haven’t lived through it for a long time and certainly most traders on Wall Street haven’t traded through it.”

El-Erian pointed to the surge in used cars prices to their highest in more than 60 years, which has been followed by an increase in prices of new cars, and a rise in the price of rental cars. This, he said, shows inflation is not contained.

“There is a logic to these inflation chains. They take time, and most people, unfortunately, haven’t seen them,” El-Erian told CNBC. “So they think everything’s isolated. Actually, it’s not. It’s interconnected.”

El-Erian, who is also the president of Queens’ College, Cambridge University, countered the longstanding narrative of the Federal Reserve that inflationary pressures are temporary.

The central bank slashed rates to historic lows at the start of the pandemic to stimulate economic activity and has signaled its intention of keeping interest rates unchanged until 2023.

Fed Chair Jerome Powell has repeatedly said that inflation will pass as the economy settles into a new normal. However, updated rate-hike projections six weeks ago signal that the central bank could see inflation posing a larger risk than initially thought. Powell is expected to issue a new statement this week, on July 28 at 2 p.m. ET.

“I don’t expect fireworks, El-Erian said. “The Fed has adopted a new framework that is backward-looking. They’re no longer forecast-based; they’re outcome-based.”

El-Erian also maintained that inflation will continue to run higher.

“The big question for me is not whether inflation will be higher than what the Fed expects,” he told CNBC. “It is whether the system is wired loosely enough to adjust to that – and that’s what we going to learn.”

The Consumer Price Index rose 0.9% between May and June, much more than the consensus estimate of 0.5%.

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Bitcoin edges lower for its worst weekly performance in over a month as as cryptocurrencies struggle to recover from heavy sell-off

Representations of virtual currency bitcoin are placed on US dollar banknotes taken May 26, 2020.
Representations of virtual currency bitcoin are placed on US dollar banknotes taken May 26, 2020.

Bitcoin slipped Friday to clock worst weekly performance in more than a month as the world’s largest cryptocurrency by market cap inches closer to a key support level of $30,000.

Bitcoin on Friday morning was trading at $31,363 as of 8:30 a.m. ET, according to data from CoinMarketCap.

An eventual break below this level will be crucial, Julius de Kempenaer, senior technical analyst at StockCharts.com, told Insider.

“If and when this happens, $20,000 is on the cards as the next level of support to watch,” said.

The selling pressures began on Thursday when the digital asset suffered its biggest drop in about 10 days. Bitcoin in the past month has been trading in a range at just around half its April peak price of nearly $65,000.

Alongside bitcoin, other cryptocurrencies have slid in the last 24 hours:

Cryptocurrencies have struggled to rebound from a massive crash in May when the value of the total market dropped by nearly half in just seven days.

A number of headwinds have been blowing against the crypto market since the brutal sell-off.

Federal Reserve Chair Jerome Powell on Thursday told the Senate Banking Committee that cryptocurrencies have failed to become a viable payment method. A day earlier, he also said the US won’t need stablecoins and cryptocurrencies if the central bank were to issue its own digital currency.

There have also been problems plaguing the the world’s largest cryptocurrency exchange, Binance, which is weathering an intensifying regulatory crackdown. Italy most recently joined a growing list of nations to issue a warning against the exchange, saying it is not authorized to do business in the country.

Bitcoin is also under increasing fire for its impact on the environment from critics who points to the heavy energy consumption of bitcoin mining.

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Global stocks waver after Fed’s Powell says surging US inflation will fade

Traders work on the floor of The New York Stock Exchange
  • US stocks looked set to open lower on Thursday as investors digested Jerome Powell’s comments.
  • The Fed chair presented a dovish testimony to Congress and suggested inflationary pressure won’t last.
  • China’s second-quarter GDP rose 7.9%, slightly missing economist forecasts for an 8% increase.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Global stocks whipsawed on Thursday after Fed Chairman Jerome Powell said he sees much of the inflationary pressures as transitory, and indicated the shift to tightening monetary policy won’t take place anytime soon.

Futures on the Dow Jones, S&P 500, and Nasdaq fell 0.2%, suggesting a lower start to trading later in the day.

In his congressional testimony on Wednesday, Powell said the recent inflation data so far has been higher than expected or hoped for, but is linked to a “small group of goods and services directly tied to the reopening.”

He cited the price of lumber, now trading at 8-month lows after rallying 275% since May 2020, as an example of many of the transitory factors.

US 10-year Treasury yields were last down 3.5 basis points at 1.314%, with lower real rates and inflation expectations contributing to the decline, Deutsche Bank analysts said.

Elsewhere in Europe, equities traded lower as investors digested Powell’s comments and awaited more earnings releases.

The UK unemployment rate rose to 4.8% in the three months to May, from 4.7% in the three months to April, but was down from 5% in the previous quarter. UK markets showed little reaction to the data.

But COVID-sensitive stocks are one area that continue to struggle as investors assess the global spread of the delta variant, with the STOXX 600 travel and leisure index falling a further 0.9% for a third consecutive monthly decline.

London’s FTSE 100 was about flat, the Euro Stoxx 50 fell 0.3%, and Frankfurt’s DAX fell 0.5%.

Asian markets were mostly higher after China posted growth of 7.9% in the second quarter, slightly missing economists’ expectations for an 8% increase. But other data for June surprised to the upside, with retail sales coming in at a year-on-year growth rate of 12.1%, compared to the expected 10.8%.

The Shanghai Composite rose 1%, Hong Kong’s Hang Seng rose 0.8%, while Tokyo’s Nikkei fell 1%.

Oil prices fell after the United Arab Emirates and Saudi Arabia reached a compromise on production, with the former said to have secured a higher baseline for its crude output. The threat of weaker OPEC+ cohesion and higher than anticipated production will cap oil price gains for now, Jeffrey Halley a senior market analyst at OANDA, said.

Brent crude fell 1.47%, to $73.66 a barrel, and West Texas Intermediate fell 1.7%, to $71.84 a barrel.

Read More: BANK OF AMERICA: Buy these 22 stocks set to completely crush earnings expectations as volatility around reports creates a stock-picker’s paradise

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US stocks trade mixed as Powell reiterates in testimony that inflation will pass

Stock Market Bubble
A trader blows bubble gum during the opening bell at the New York Stock Exchange (NYSE) on August 1, 2019, in New York City.

US stocks rallied on Wednesday after Federal Reserve Chairman Jerome Powell reiterated that inflation will pass.

The benchmark S&P 500 index scaled close to all-time highs, while the Dow Jones Industrial Average also inched up. The Nasdaq composite fell slightly.

The yield on the US 10-year Treasury slipped 6.1 basis points to 1.353%.

The Fed chief said the US economic recovery still has further to go before the central bank considers tapering its asset purchases, according to prepared remarks ahead of his House Financial Services Committee testimony.

Powell said the US job market “is still a ways off” from the progress the Fed hopes to achieve, suggesting it would stick to its highly accommodative monetary policy even in the face of data showing inflation is on the rise.

Powell on Wednesday presented the central bank’s semiannual monetary policy report to Congress and took questions from lawmakers.

Here’s where US indexes stood at the 4 p.m. close on Wednesday:

Stocks have scaled to record highs in the past weeks as economic data continuously point to a strong recovery on top of robust corporate earnings.

Bank earnings continued Wednesday with Bank of America reporting revenue that fell short of Wall Street’s forecasts but blew past net income predictions.

Citigroup meanwhile posted earnings that came in above analyst estimates as the banking giant’s stock trading offset a miss in fixed income.

Big movers include Oatly, which fell 6.1% to an all-time low of $19.40 after short seller Spruce Point Capital Management accused the oat milk company of misleading investors on multiple fronts and overstating its revenue.

Peloton shares also dipped by 5.4% to $113.33 following a rating downgrade to neutral at Wedbush.

In cryptocurrencies, bitcoin, dogecoin, and cardano’s ada token hit their lowest price in three weeks before recovering slightly. Ether touched a two-week low.

Powell in his testimony challenged the need for cryptocurrencies if the central bank were to issue its own digital currency.

“You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies, if you had a digital US currency,” the Fed chief said.

Oil prices slid after Saudi Arabia and the United Arab Emirates reached a compromise allowing the latter to boost its output, Reuters reported.

West Texas Intermediate crude slipped 3.20%, to $72.84 oil per barrel. Brent crude, oil’s international benchmark, fell 2.56%, to $74.53 barrel.

Gold edged higher for the second straight session, rising 1.08% to $1,825.56 per ounce.

Lumber continued its five-day slide to at $642 per thousand board feet.

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Inflation is pretty high right now, but it probably won’t be a huge problem in the long term

used car lot
Used cars were responsible for a third of the inflation spike between May and June.

  • Consumer prices rose 0.9% between May and June, a 13-year high.
  • But a large part of the increase came from items affected by the pandemic and reopening.
  • As the economy returns to normal, these prices should stabilize, keeping inflation in check.
  • See more stories on Insider’s business page.

The much-expected wave of inflation amid an unprecedented post-pandemic economic reopening is here, but how long it will stay with us is an open question.

The Bureau of Labor Statistics reported Tuesday that the Consumer Price Index, which measures changes in the prices of a basket of common goods and services, rose 0.9% between May and June. That was far higher than Bloomberg’s consensus economic forecasts of 0.5%, and according to BLS, was the largest one-month jump in prices since June 2008.

The price index was 5.4% higher than it was in June 2020, marking another record high for recent years:

Too much inflation for too long can cause a lot of trouble for an economy: Consumers are able to buy less stuff if goods and services are too expensive, and savers and investors can see their real returns plummet if the interest rates they receive can’t keep up with rising prices.

But the current round of price increases may be more benign, and could very well abate within the next several months.

A lot of recent inflation is from the weirdness of a post-pandemic economic reopening

Much of the inflation seen in recent months comes from the collision between supply chains still recovering from the disruption of the pandemic and a surge of pent-up demand as vaccination rates increase and lockdowns and health restrictions lift.

As Federal Reserve Chair Jerome Powell pointed out in testimony to Congress on Wednesday afternoon, goods and services that have been especially affected by the pandemic and reopening have seen the biggest price increases.

Powell said, “the incoming inflation data have been higher than expected. But they’re actually still consistent with what we’ve been talking about, that the very high inflation readings are coming from a small group of goods and services that are directly tied to the reopening of the economy. It’s new cars, used cars, rental cars, hotel rooms, airplane tickets – things we understand.”

Auto manufacturers have been facing a shortage of computer chips, slowing production of new cars. Meanwhile, demand for used cars has skyrocketed, leading to used cars and trucks seeing a historical record-high 10.5% price increase between May and June alone. BLS noted that about a third of the total CPI increase between May and June came from used cars and trucks.

Pent-up demand for travel after a year of pandemic lockdowns has led to big price increases in travel-related services like airline tickets, rental cars, and hotels, as noted by Powell.

The good news is that as the economy returns to normal, these markets should settle down somewhat. According to Cox Automotive, wholesale car prices declined from May to June, which should lead to retail prices tapering off sooner rather than later. And as in-demand businesses like airlines and hotels continue to hire or rehire workers and rebuild capacity to meet heightened demand, prices should stabilize there as well.

Of course, there are still risks that inflation could go longer and higher than expected. Housing prices have surged this year, and if that continues it could lead to more permanent cost increases. Supply chains and labor markets still need to stabilize, and if they don’t, prices could keep increasing.

Still, policymakers and markets seem to be not overly worried about longer-term inflation. Powell wrote in prepared remarks before Wednesday’s testimony that the Fed expects that inflation “will likely remain elevated in coming months before moderating.” A bond-market measure that roughly shows what investors expect inflation to look like in five years is a bit higher than before the pandemic, but far from levels that would suggest sustained high inflation.

While the future course of inflation is still an open question, there’s a good chance that the pressure on Americans’ wallets should subside in the next few months.

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Fed Chair Powell met Coinbase CEO Brian Armstrong and ‘Crypto Dad’ Chris Giancarlo at a time of heightened interest in digital coin trading

Federal Reserve Board Chairman Jerome Powell leaves after a Senate Banking Committee hearing on The Semiannual Monetary Policy Report to the Congress on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas
Federal Reserve Chairman, Jerome Powell.

  • Fed Chair Jerome Powell met Coinbase CEO Brian Armstrong on May 11, a calendar entry shows.
  • He also virtually met former CFTC chairman Chris Giancarlo, known as “Crypto Dad” for his early adoption of digital assets.
  • The Fed is exploring issuing a digital dollar, with a paper detailing its implications due this summer.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Federal Reserve Chair Jerome Powell met Coinbase CEO Brian Armstrong on May 11 and crypto backer Christopher Giancarlo the next day, according to an entry in his monthly calendar.

Powell’s schedule showed his in-person meeting with Armstrong, which included former House Speaker Paul Ryan, lasted 30 minutes. The crypto market saw wild trading activity around that time, with bitcoin’s price reaching its highest volatility in a year in May.

Armstrong published a Twitter thread on May 15 about his meetings with politicians and agency heads, saying the “goal was to establish relationships and help answer questions about crypto.” He indicated assistance on providing more regulatory clarity on the space as part of the newly formed Crypto Council for Innovation led by Coinbase, Square, Fidelity Investments, and Paradigm.

@brian_armstrong/Twitter

Coinbase is the largest US crypto exchange with about 56 million registered users that processes $335 billion in trading volume per quarter. It became the first such exchange to go public in April, trading under the ticker symbol “COIN” on the Nasdaq.

A separate virtual meeting with Giancarlo, who was dubbed “Crypto Dad” while serving as chairman of the Commodity Futures Trading Commission, took place on May 12. His chairmanship overlapped with new markets for bitcoin futures, according to Bloomberg. That meeting, marked as a discussion on the “Digital Dollar Project,” also lasted 30 minutes.

Powell is overseeing the Fed’s exploration of a digital version of the dollar that would be controlled by the central bank. The Fed plans to publish a paper this summer that will lay out the risks and opportunities associated with issuing a central bank digital currency (CBDC).

“We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks,” Powell said in a statement in May.

Read More: How to mine doge: An 18-year-old TikTok influencer shares his process for earning crypto without directly buying via a $700 rig – and explains how it works for other altcoins including litecoin

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The economy is getting better, but the rest of 2021 will be far from normal

Job fair Florida
A man hands his resume to an employer at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds.

  • The 2021 economy has been a wild ride with reopenings, people quitting jobs, and firms desperate to hire.
  • Economic data points to improvements in the second half of the year as wages rise and jobs increase.
  • But not for everyone. Unemployment for teenagers and Black and Hispanic workers is still high.
  • See more stories on Insider’s business page.

Halfway through 2021, the June jobs report signals a good step forward, but let’s not call this economy “normal” just yet. Things are still kinda weird.

The US added 850,000 jobs last month, beating estimates and showing a strong acceleration in the labor market’s recovery. It was the largest one-month jump since August and the sixth straight month of gains. After a bumpy six months for the labor market’s recovery, it’s starting to look like smoother sailing.

But it’s still choppy. While the sectors that transitioned to remote work have regained almost all lost jobs, those hit hardest remain far from healed. And while pandemic lockdowns have reversed, businesses will have to rehire in a wholly new environment.

The first strange signs for the economy came in April, when vaccinations were running ahead of schedule and reopening started in earnest. The jobs report that month was expected to show 1 million payrolls added, but it was a paltry quarter of that figure. Job openings sat at record highs, but factors ranging from virus fears to childcare costs kept workers on the sidelines. It was better than fears of a double-dip recession – when jobs unexpectedly dropped in December – but it was decidedly abnormal.

As the country reopens, the post-pandemic labor market is taking shape. It has little in common with the one left behind in early 2020.

An early look at the new job market

Working from home redefined employment, real estate, even culture in 2020. It’s shrinking back from its widespread adoption, but it may be here to stay. Despite many state and local governments reversing their strictest economic restrictions, roughly 14% of Americans still telecommuted in June.

The labor shortage remains an obstacle for businesses looking to hire, and it’s having an effect on workers’ pay. Average earnings climbed again in June. Pay grew the most in the leisure and hospitality sector, suggesting higher pay helped businesses hire more workers.

On the other end of the market, only 10% of job seekers are urgently looking for work, according to hiring giant Indeed. Most are taking a more leisurely approach, citing virus fears and financial cushions. June data reflects that relaxed pace; the number of people actively looking for a job was flat and the unemployment rate edged higher to 5.9%.

And while job growth broadly improved in June, the recovery is still leaving several groups behind. Despite a hiring bonanza for low-wage jobs, unemployment among teenagers rose to 9.9% from 9.6%. Unemployment among Latinos rose 0.1 point to 7.4%, while Black unemployment gained to 9.2% from 9.1%. That compares to the 5.2% unemployment rate seen among whites.

Relief programs for unemployment and student loans are about to end

There’s reason to believe Americans will take more jobs in the months ahead.

Several states are just starting to end the federal boost to unemployment insurance (UI) ahead of its September expiration. Twenty-six states in total – all but one are Republican-led – are set to end the benefit early in an effort to spur hiring. And jobless claims data suggests the effort is working. Filings for UI fell to a new pandemic-era low last week.

Other government relief programs, including the student-loan freeze, are also set to lapse in the fall. Economists refer to the deadline as a “fiscal cliff” and expect it to drive more Americans into the workforce.

Continued vaccinations, school reopenings, and reskilling should have a similar effect, Federal Reserve Chair Jerome Powell said in a June 16 press conference. Childcare costs and virus fears kept countless Americans at home, unable to find work. As those pressures diminish in the coming months, it’s likely worker supply will more closely match labor demand, Powell said.

“I think it’s clear, and I am confident, that we are on a path to a very strong labor market,” he added. “I would expect that we would see strong job creation building up over the summer and going into the fall.”

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