Fed Says Due To Surged Financial Volatility, US Labor Market Tightens

Posted on: Feb-2019 | ICT and Media

Recently, in its new report on the economy, the Fed (Federal Reserve) said that labor market is tightened in the U.S. as businesses are struggling to find workers at any expertise level and wages usually grew moderately. The Fed’s “Beige Book” report—which is a picture of the economy picked up from conversations with business contacts—reported that stiff labor market in all of the 12 Fed districts is reporting reasonable wage gain. A mass of districts also stated modest-to-moderate cost increases, with a figure stating higher taxes had contributed in driving up costs.

The Fed reported that prospects for the financial system were usually positive, but adding to that many districts said contacts were less positive owing to elevated financial market volatility, increasing short-term interest rates, declining energy prices, and increased trade and political insecurity. The impact of the partial US administration shutdown seems to be muted while the details for the “Beige Book” were collected. The only revelation of a closedown-related shock came from the Chicago Fed. Reportedly, the Chicago Fed said farmers and others were dealing with enormous uncertainty owing to the slowed discharge of administration agricultural reports. The payments to farmers affected by tariffs were also disturbed by the shutdown.

In the previous month, the Fed increased the interest rates during its policy meeting, which is its fourth hike of 2018. Fed Chairman Jerome Powell said as the inflation is showing no indication of increasing the Fed’s 2% target beyond, the central bank would take a “tolerant” approach toward increasing rate hikes this year. Presently, there are escalating worries regarding trade policy and declining global development. This year’s partial government closedown threatens growth further and the U.S. central bank has begun to prepare for its next policy meeting that is later this month.