Here’s Mohammed El-Erian’s reaction at Bloomberg View to the November 2016 Bureau of Labor Statistics’s employment situation report:
Assessed in a macro-economic context, the seemingly competing signals point to structural headwinds to a comprehensively healthy U.S. labor market, including skill mismatches, technology displacement and insufficient social mobility. These help explain why the average household still feels unsettled and insecure despite an impressive eight years of job creation under President Barack Obama. And they point to the importance of complementing the pro-growth elements of President-elect Donald Trump’s agenda — with its appropriate emphasis on tax reform, deregulation and infrastructure — with policies aimed at modernizing education, reforming immigration and, encouraging better labor retooling and retraining, including through greater use of public-private partnerships.
He really sees a different world than I do. What I see is a slack labor market and a decline in the number of permanent full-time jobs in favor of temps. That’s basically just a strategy for pushing total compensation down, particularly when the temps are being imported from overseas.
Meanwhile, let’s consider a couple of questions:
- Will the Fed raise interest rates at its next meeting? I think it will.
- If it does, will inflation increase? I think it will.
The Fed will raise rates, possibly by more than anyone predicts, because The Establishment is going to attempt punishing the American people for voting for Trump.