Unemployment in the US is at a record low. However, it is heating up under the inflationary cauldron

Unemployment in the US is at a record low. However, it is heating up under the inflationary cauldron

In June, the United States added significantly more jobs than analysts and markets generally expected. Unemployment rates are thus at an exceptionally low level, even lower than before the onset of the coronavirus pandemic.

US struggles with low unemployment and inflationary growth

The news from the US labour market is on the one hand favourable, on the other hand it raises concerns. Record low unemployment, which is at 3.6 %, continues to create inflationary pressures. The rate of growth in the price level is thus still at 40-year highs, with inflation exceeding eight per cent.

Will the US Federal Reserve raise its benchmark interest rate?

High inflation, combined with an extremely strong labour market, is only fuelling speculation that the Federal Reserve (the US central bank) will again raise its key interest rate significantly in July. “I’m 100 percent in favor of raising the interest rate by 0.75 percentage points,” Raphael Bostic, head of the Fed’s Atlanta office, told CNBC.

He said the latest labour market reports confirm that the US economy is strong and that it can generate jobs even if interest rates rise. During June, the US labour market added over 370 000 jobs, which far exceeded general expectations.


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