On Friday, the American economy reported mixed data on the labor market.
Unfortunately, even 30,000 new jobs could not tame the impending avalanche of unemployment. This was followed by alarming data on delinquencies: on loans, car loans and cards. The pain is most acute for low-income people, who have largely used what they have been able to save up during the pandemic through government stimulus and exemptions on obligations such as rent and student loans. “The rise in delinquencies and defaults is symptomatic of the difficult decisions these households are having to make right now — whether to pay their credit card bills, rent an apartment, or buy groceries,” said Mark Zandi, chief economist at Moody’s Analytics. The final word will be with the regulator and the head of the Fed, Jerome Powell.
If such dynamics continue, it will be forced to stop with an increase in the interest rate, despite the fact that the inflation target has not yet been reached. There is a very subtle point here – it is important not to miss or ignore the problems of households and to balance the economy. The last “trump card” up its sleeve in the form of a printing press, which repeatedly rescued America, may no longer help.
