Jobs Plateau and Inflation Slows

Could the United States economy, after months of progress, be entering a recession? The economy has come a long way since the Coronavirus (COVID-19) pandemic, recovering from rampant inflation and unemployment. This is mostly due to the Biden administration’s efforts in supporting essential industries and growing the middle class. The job market is currently the strongest it has been for decades, as the unemployment rate has gone down and inflation continues to fall from its COVID-19 peak of nearly 10%. Despite these positive projections, seemingly slowing job growth in October has economists hopeful and alarmed in equal measure. To them, a cooling job market may mean anything from slowing inflation to a possible recession (National Broadcasting Company).

Neoliberal policies, a philosophy stressing minimal government interference in the economy, had left the U.S. unprepared for a national crisis like the outbreak of COVID-19 (Roosevelt Institute). Minimal interference in the market meant that workers had low job security, depleted public services such as healthcare and scarce collective interdependence (Sage Journals). Employment fell by 22.4 million jobs in March and April 2020, with important industries such as manufacturing suffering heavy losses. Following the end of the quarantine in 2021, a rapid rise in demand for previously banned services such as traveling coupled with interest rates near zero led to the worst inflation in nearly 40 years (Forbes). These issues have become pivotal to Gen Z as they enter the economic world. They are cutting back on spending and finding it difficult to form good credit (USA Today). Seniors who will soon be applying for student loans and searching for jobs  Although many feel that neoliberalism is to blame for this, senior and Economics Club Vice President Siena Hicks feels that although neoliberalism has its pitfalls, the economy needs a degree of freedom.

“[Because the U.S. has] a mixed economy, I think we need some [government] intervention but we can not have that much,” Hicks said. “We need some intervention to be able to control [the economy], but we have to make sure that [the government does] not get too much power over it. [For example, now,] there will be less jobs [due to government intervention], but in the long run it should help prices go down.”

The election of President Biden signaled a significant change in economic policy. To recover from the damage of the COVID-19 Pandemic, he abandoned neoliberalism by implementing economic reforms. Dubbed Bidenomics, the president’s policies focus on growing the middle class and combating rising inflation. Legislation such as the American Rescue Plan Act and Infrastructure Investment and Jobs Act of 2021 have been central to investing in vital industries and supporting workers in securing higher wages and job security. According to The Guardian, Bidenomics have been the most successful economic policies in decades, curbing economic inequality, booming manufacturing industries and creating a strong labor market. The labor market has now seen 34 months of growth and unemployment rates have remained below 4%, finally returning to where it was in February 2020 (Roosevelt Institute). The president has also tackled inflation, by having the Federal Reserve set adequate interest rates, which caused inflation to drop from 9.1% in June 2022 to 3.7% in September 2023. Senior Katherine Chiu, Vice President of the Economics Club, believes that although Bidenomics will continue to be successful, the immediate future will yield a brief period of trouble before rebounding.

“In the long run, [Bidenomics] might successfully create jobs and combat inflation,” Chiu said. “At the same time, I feel like there is going to be a point where [the economy] might get a little worse. A lot of people might be out of jobs all of a sudden. [I believe] there is going to be at least a short period of time where it is going to be worse and then [the economy] will get better.”

Despite the trend of falling inflation and unemployment rates, October has yielded unfavorable results for economists. U.S. economy created 336,000 jobs in September, which was not only double the amount experts projected for the month but about twice the jobs created in August. In October, however, a mere 150,000 jobs were added, although nationwide strikes such as the United Auto Worker strikes led to less workers being accounted for in these statistics (NBC). Some experts see this job plateau as a sign of a slowdown in inflation, pointing to lower airfare, car, gas and food prices in October (Public Broadcasting Service). Others believe that it indicates a slowing economy and even a long anticipated and dreaded recession, which would occur if a large supply of goods were not consumed due to their expense. Economists and the Federal Reserve itself are uncertain whether current interest rates are enough to quell inflation or a hike, an increase in interest rates, is necessary. A hike may tame inflation further but could potentially trigger a recession if overly aggressive (NBC). Experts have likened the current state of the economy to the popular fairy tale “Goldilocks and the Three Bears”: not too hot and not too cold (Bloomberg). The hope for the Goldilocks scenario is that the job market remains solid but cools gradually and inflation continues to go down. This creates new questions about the future of young adults such as Chiu and Hicks who will soon be entering the workforce. A slowing job markets raises concerns about how these seniors will find sustainable work after high school or college. However, for seniors begining to consider student loans, slowing inflation could be a respite from high interest. Junior Eric Lu is confident that the economy will reach a point where jobs are readily available and inflation is kept under control. 

“[The current state of the economy] does not sound that catastrophic,” Liu said. “If 300,000 [jobs created] is double the expected value, then 150,000 [jobs], a statistic already deflated due to strikes, is not that far below the target. Besides, [the results] are only for a single month.”