What's your biggest guess as to why, even with 5% interest rates, they haven't been able raise unemployment yet?
How long will they need to hold interest rates at 5%+ before we see a raise in unemployment?
How long will they need to hold interest rates at 5%+ before we see a raise in unemployment?
The Fed rate doesn't directly affect employment - at best it may encourage some larger businesses to postpone hiring, but most companies (outside tech, which a.) has some very good macroeconomists b.) intends to survive and c.) is unusually sensitive to cost of capital) aren't going to lay off people until their bottom line takes a hit that puts their survival in question. Smaller profitable companies aren't directly exposed to the cost of capital at all, because they fund operations out of cash flow.
The way interest hikes combat inflation is that they make certain lines of business unprofitable, which makes companies either voluntarily shutter them or go out of business for being unprofitable, which frees up the workers involved in those businesses to compete for core, need-to-have industries like food and logistics, which holds down wages. This is happening in tech, but it hasn't filtered down into the broader economy. And it needs to - even if you lay off everyone who "learned to code" in the last 10 years and force them back to working retail, there are still way more job openings than workers.
We'll see unemployment go up when we see major Fortune 500 companies go bankrupt, and we'll see inflation drop sustainably when people are on bread lines.
The money injected into the system was created 2, 3, and 4 years ago. It takes a few years for the effects of multi million dollar financing to show.
Lots of companies still filling back orders and latent demand from the last three years
When unemployment is low companies are reluctant to lose staff for fear of not being able to rehire when needed
The housing market hasn’t slowed much which is a huge employer
Pent up demand for travel and services is still strong
It's going to be really tough to do that if they can't create some unemployment over here.
The US’ economy is not as capital intensive as other economies past.
I don't know. New + used car sales as well as new 15/30 year mortgages (or what would typically be refinances maybe) have to have some effect.
A car salesman closes less deals, he has less money to go on vacation with, etc. etc.