Daniel Lacalle bespreekt de Amerikaanse inflatie en het algemeen economisch beleid met econome Judy Shelton.

De attitude van de FED jegens eventuele inflatie is ambivalent, om het vriendelijk te zeggen. Ook de implicaties van het woord ‘transitory’ komen langs.

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Duur: 49:19 min.

Publicatie 9 januari

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The headline 3.9% unemployment rate looks positive, but job creation fell significantly below consensus, at 199,000 in December versus a consensus estimate of 450,000.

The weak jobs figure should be viewed in the context of the largest stimulus plan in recent history. With massive monetary and fiscal support and a government deficit of $2.77 trillion, the second highest on record, job creation falls significantly short of previous recoveries and the employment situation is significantly worse than it was in 2019.

The most alarming datapoint is that real wages are plummeting. Average hourly earnings have risen 4.7% in 2021, but inflation is 6.8%, sending real wages to negative territory and the worst reading since 2011.

The number of persons not in the labor force who currently want a job did not change in December, at 5.7 million. This is still 717,000 higher than in February 2020.

The number of long-term unemployed (those jobless for 27 weeks or more) remains at two million in December, or 887,000 higher than in February 2020. Long-term unemployed accounted for 31.7 percent of unemployed, according to the Bureau of Labor Statistics.

The labor force participation rate remains at 61.9 percent in December and has been stagnant for almost twelve months. Labor participation remains 1.5 percentage points lower than in February 2020. Finally, the employment-to-population ratio is just 59.5 percent, or 1.7 percentage points below the February 2020 level.

Now put this in the context of a massive three trillion-dollar stimulus and the evidence is clear. There is no bang-on-the-buck from this unprecedented spending spree. All the jobs recovery comes from the re-opening. The stimulus plan has not accelerated job growth, it has slowed it.

A few months ago I had a conversation with Judy Shelton, one of the top economists in the United States, and she mentioned that the recovery would be stronger without this stimulus plan, and she has been proven right.

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