President of the United States of America, Joe Biden, on Friday said that the US economy is showing signs of easing inflation. While making a statement about easing inflation, Joe Biden was responding to a report by the labour department that jobs in the country increased by 315000 in last month.
According to Joe Biden, jobs and wages in the American economy have gone up. People are also reportedly getting back to work in huge numbers. He then added that the country is seeing some signs of inflation beginning to ease. In order to avoid any backlash over the statement regarding inflation, Joe Biden said that he is not over-promising anything regarding easing inflation.
A few days ago, the chairman of the US Federal Reserve, Jerome Powell made a speech at the Jackson Hole symposium in which he said that the Federal Reserve will be taking stricter measures to bring down inflation in the economy.
In June inflation in the United States had touched a 4-decade high of 9.1%. The increasing fuel prices and the continuing crisis in the global supply chain resulted in prices of essential commodities going up. The annual inflation rate then slowed down to 8.5% in July 202, which is still higher than the Federal Reserve target of 2%.
According to Jerome Powell, a higher inflation rate is expected to harm the economy more than the negative effects of increasing interest rates. Therefore, the Federal Reserve will be continuing with its aggressive interest rate hikes until and unless the inflation rate in the country is 2% or a bit below.
Following the speech by Jerome Powell stock market in the United States crashed down and investors lost nearly 1.2 trillion dollars as side effects. The statement by the FED chair regarding increasing interest rate hikes was against the expectations of the market.
There are also concerns that the aggressive interest rate hikes will result in a slower economy. As the circulation of cash will dry up, the small and mid-sized businesses will be affected the most which will result in high unemployment.
According to a report released by the department of labour affairs, employers in the United States of America hired more workers than expected last month. Even though hiring has increased in the country, the vital unemployment rates continued to go up during the month of August. The unemployment rate in the country is currently;y standing at 3.7%. There are also major concerns within the labour market that actions by the Federal Reserve will result in a slow domestic economy.