US Labor Market 'Deteriorates': Good News for Wall Street?
According to the Federal Reserve's November Beige Book, the US labor market weakened, with 'modest' employment gains and some firms cutting jobs. The FT presents this as a 'deterioration.' However, for the Federal Reserve, a 'deteriorating' labor market often signals cooling inflation – their primary policy goal. For years, Federal Reserve officials have openly discussed the need for 'some pain'
in the economy to combat inflation, implicitly meaning less wage growth and higher unemployment for the working class. This 'deterioration' is precisely the intended outcome of aggressive interest rate hikes. While the headline mourns the 'deterioration,' the underlying message for policymakers and investors is often one of success in curbing worker power and wage demands, thereby protecting
profit margins. (Funny how Wall Street cheered when rate hikes meant your job was less secure.)