Dawit Kebede

CUNA research: Labor market too strong for Fed

October 10, 2022

CUNA Senior Economist Dawit Kebede issued the following statement in response to the Labor Department’s September Employment Situation:  

“The U.S. economy added 263,000 jobs in September, lower than the year-to-date average of 420,000. However, the job market remained very strong with notable gains in several sectors and the unemployment rate declined from 3.7% to 3.5%.  

“The labor force participation rate declined slightly in September after showing signs of improvement in August. The labor supply is still 1.1 percentage points below pre-pandemic level and may not fully recover. Hiring demand is also cooling down. In August, job openings declined by 1.1 million. This implies that the number of jobs available per unemployed person declined from 2 to 1.7. This is a big imbalance in labor demand and supply.  

“A decline in hiring demand is good news for the Federal Reserve which is hoping to create some slack in the labor market. However, a lower unemployment rate is not a step in the right direction when the Federal Reserve is tightening monetary policy to cool an overheating economy.”