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Job gains raised some eyebrows
She expounded on the point: “The resilient labor market continues to surprise the markets as rates and inflation remain high. This points to interest rates remaining higher for longer as the rate of inflation remains more than twice the 2% target level. Higher mortgage rates mean fewer buyers and borrowers – not good news for the real estate market.”
Yet the report did telegraph a possible cooling down. “The report also showed some signs of things slowing because the wages earned component was slightly lower than it was the month before and the unemployment rate went up,” Cohn said. “The rise in the actual employment rate and the fact that hourly earnings rose less than last month could be indicative of the jobs market finally slowing down.”
The bullish economy continues despite such signs of potential slowdown, she noted: “If you look at things like openings and people getting laid off – which has been mostly in the tech industry – our economy is holding up pretty well – considering the fact that the rate is almost 5% higher than it was a little over a year ago.”
Inflation might have already come down to the desired 2% were it not for those pesky job gains: “If you have a job and make money, you’re going to spend it,” she said. “If you’re spending it, it’s inflationary.”
What will the Fed do next?
All eyes are turned to the Fed, and what its next move will be: “The big question is: What does this mean for the Fed next week,” she said. “Some people say it shows the economy is holding up so the Fed should pause on raising rates – which to me sounds counterintuitive.”
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