Why Does A Good Job Report Bad For The Economy?

Question

I understand why increasing interest rates can negatively affect the economy, but why would the Feds raise the rate because of the positive jobs report?

I always assumed that more people employed means more discretionary spending leading to more corporate profits.

In: 7

Answer 1

> positive jobs report

Positive for who?

If I’m an employer looking for workers a “positive jobs report” is not at all positive for me. It means I’ll have a harder time hiring people and have to pay my employees more money to get them to stay with me. So as someone who’s shopping for workers, a low unemployment rate is bad for me.

You’re right that more people having money can lead to higher business revenues. But they are mostly offset by the higher expenses of having to hire people at a higher rate of pay.