Michael Lytle, StoneX Wealth Chief Investment Officer, explains what underemployment reveals about the labor market and its implications for the Federal Reserve.
Lytle explained that underemployment expands on the monthly unemployment rate by adding marginally attached workers and part-time employees seeking full-time jobs. This provides a broader look at slack in the labor market “that is not the level of employment they want”.
The rate now stands at 8.1 percent, up from a low of 6.6 percent in late 2022. While Lytle noted this is not high by historical standards, he stressed that “it’s that trend, it’s the grind higher” which has often been consistent with economies approaching recession.
A potential U.S. government shutdown could delay the release of employment reports and even leave them incomplete. Lytle warned this would further cloud the economic picture, adding uncertainty for policymakers “when we finally get this report, it very well could be late”.
With inflation, growth and employment already difficult to balance, the Federal Reserve may be forced to make policy decisions with incomplete or outdated data. As Lytle observed, “interesting time to be a fed governor for sure”, highlighting the complex landscape for monetary policy in the months ahead.
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---- Expert by Michael Lytle, StoneX Wealth, Chief Investment Officer
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