Thorn in economy side-Inflation

[Zoe]

Exactly. The objective of higher interest rates (at least one of them) is to cool down an economy - part of which includes allowing the unemployment rate to increase. No one that actually understands Economics wants a 0 unemployment rate. Most Economists put the natural rate at around 5%. This not only serves to cool the economy, but also creates a cushion for job movement. When unemployment is too low, there is friction WRT job movement.

That make sense?

The main reason for higher fed funds rate to banks in order to cool inflation is shrink money supply. There is a problem with tariffs and current employment being lower and FED knows it. Inflation is still roaring which indicates Fed should not lower fed fund rates to banks from the federal reserve bank. On the other hand, the Federal Reserve Bank knows that tariffs are causing increase in cost of goods sold to employers and employers are being forced to raise prices to cover their cost of good sold increase from tariffs.

Hence employers are not hiring. Employers are shrinking their labor force to help the cost of good sold increased from foreign imports. Tariffs are at heart of the problem.

 

[Zoe]

I'll put it in simple terms. Jobs are not coming home as quick as Trump thought based on tariffs. Employers are paying higher prices because they are still importing.

Their profit margin is very important to investors and employees. When their cost of goods sold rises, they have to make it up by raising price and/or laying off employees.

 

[alebrewer]

I'll put it in simple terms.

Thank you for that, Zoe. Much easier to understand when you do that.

 

[Zoe]

Now I am sure the huge tax cut and/or subsidy is helping some corporations on the increase on cost of goods sold vs increase on price of imports but so far on employment, the tariffs are beating their tax cuts because inflation is still rolling and hiring/employment is drifting.

Those CEO's and management ain't taking no pay cut. Forget that.

 

[Digger88]

Look at the unemployment numbers, the RE market slowdown, Trump's tanking ratings, rising prices, and failed peace deals. It is all there to research with a few clicks. I wish it were different. Maybe things can turn around—but if he keeps up the revenge politics and dfirings and divisions tariffs, idk.

I wonder if you post these things to get a rise out of people it's not your smarts it's so much of what you know is wrong. The federal government has lost historic numbers of jobs which is a good thing. Housing is not slowing down, Trump's rating are doing well last I checked and he endded 7 wars?!?!?!?

https://twitter.com/x/status/1971160151152525701

 

[Digger88]

Maybe it is an anomaly, but my appraisal business has been dead slow for the past two weeks. Before that, I had a reasonable two busy months. Trump should slow his roll, stop the chaos, and let things settle down.

During the start of school we are all shocked surely this doesn't happen anywhere else