According to the latest ADP private payroll data, the US added 192,000 new private sector jobs in April, a decrease from the 208,000 jobs added in March. With the jobs report looming on Friday, ADP Chief Economist Nela Richardson offered her insights on the labor sector ahead of the Federal Reserve’s pivotal policy decision.
Richardson compared the Fed’s current stance to a one-legged “tree pose,” describing the situation as appearing “deceptively simple” on the surface. However, she cautions that while the Fed can keep finance charge rates elevated for an extended period, the longer they hold, the more pressure the central lender will face from Wall Street and consumers, making it “harder to maintain the position.”
Richardson says the Fed considers “the distribution of their policy effects” and that wage expansion will play a crucial role. Highlighting a scenario detrimental to the “big picture monetary policy” objective, Richardson is concerned for low-revenue workers, burdened by rising inflation and soaring prices: “Their pay is not keeping up,” she says.
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