March unemployment down in most of Valley
Unemployment refers to the situation that exists when people who are actively seeking work are without work. The unemployment is measured using the unemployment rate, which is a measure of how prevalent unemployment is. This rate is calculated through the division of the number of people who are unemployed with the current number in the labor force. The unemployment rate is normally denoted as a percentage. The unemployment rate is normally measured after regular intervals such as monthly, quarterly, and semi-annually.
In this article, the focus is on the fall in unemployment rates in the San Joaquin valley counties between February and March 2015. In Fresno county, the unemployment rate declined by 0.4percentage points, from 11.6% in February, to 11.2%. The reduction in the unemployment rate was occasioned by the increment in the availability of non-farm jobs all across that county. The growth in the education and health sectors was the main contributor to this growth, adding the largest number of jobs. The IRS’s seasonal hiring also contributed a significant number of jobs. Hence, the type of unemployment in this area can be described as cyclical unemployment since it fluctuates with the economic output.
The economic statistics also indicate that the whereas the business and professional services sectors are improving, the growth is being counteracted by a reduction in the farm jobs, thanks in part to the drought in California. Whereas this fall in the unemployment rate is positive news, the Fresco County rates are still quite high when compared to the state and national unemployment rates, which stand at 6.5% and 5.5% respectively.
The Fed Can Be Patient About Raising Interest Rates
The Fed by its full name is known as the Federal Reserve, and was established in 1913 as a holder and supplier of reserves for the commercial banks. The Fed has an arm known as the Federal Open Market Committee, which is responsible for the sale of government securities. The FOMC engages in these open market operations as a way of checking inflation.
Inflation refers to the persistent increase in the general level of prices within an economy. The FOMC can employ various instruments in order to check inflation. One of these instruments of monetary policy is the regulation of interest rates. These interest rates are the federal funds rate, as well as the discount rate. In this article, the discussion is about the Fed’s decision to exercise patience in the reduction of the interest rates. The Fed raises the interest rate in order to decrease the money supply available in the economy, which helps to counter inflation.
Since the inflation rate regulation is, still the primary driver for the regulation of interest rates, the decision to exercise patience with regard to these rates is right. The inflation rate is still at low levels, around 1.7% and steadily expected to rise to around 2%. The fact that the federal funds rate remains at 0%, has been concern from some quarters that this is leading to distortions in the market. However, the Fed will not retain the interest rates at the close to zero rates for eternity and the monetary policy will definitely start to tend towards the normal level. Hence, at the moment, patience is necessary. This reluctance to raise the interest rate may also be informed by the unemployment statistics, since the Fed may be waiting for the unemployment rate to fall.
Oil’s Plunge Could Help Send Its Price Back Up
The concept of demand and supply is among the fundamental underlying economic principles. Demand refers to the quantity, or the amount of a product or a service that a buyer desires. The quantity demanded on the other hand, refers to the amount of a certain product that its consumers are willing to buy at a particular price. Supply on the other hand refers to how much of a product the market has the ability to offer. The quantity supplied on the other hand, refers to the amount of a particular product that the producers are ready to supply, in return for a certain price.
The law of demand states that at lower prices, consumers will buy more of the product. This is the case with the recent fall in prices of oil, as discussed in this article. The reduction in oil prices has occasioned the purchase of less fuel-efficient vehicles, and has led to consumers driving more miles, since they can afford it. The article further postulates that the reduction in prices could eventually end up having the effect of increasing the prices of the oil.
The argument underlying this postulation is that the reduction in prices is likely to spark increased demand, which in turn leads to the demand outstripping supply. The consequence of demand being greater than supply is that prices tend to rise. Another argument for price increase may result from the supply side. With the prices at such a low level, the oil producers are unlikely to make a profit. Hence, they may decide to cut the production in order to reduce the supply. When the supply falls below the demand, prices will inevitably increase.
Wal-Mart Raising Wages as Market Gets Tighter
The labor market refers to a nominal market where workers obtain paid employment, and employers find workers that are willing to work. It is also in this market that determination of wages takes place. Labor markets vary in nature, and they may be local or national, and sometimes even international. The markets are comprised of smaller labor markets that interact in order to provide various skills and qualifications, as well as geographical locations. The labor market is dependent on information exchange between the job seekers and those offering the jobs on issues such as location of jobs, competition, and working conditions.
The demand for labor is a derived demand, which means that it is dependent on there being demand for the goods and services. The wages on the other hand are dependent on the forces of demand and supply, as well as the availability of labor substitutes. In this article, the tightening labor market, that is, the increase in demand for the labor means that Wal-Mart has been forced to raise wages for its employees. This increased demand relates to the unskilled labor. More and more firms are in competition for the small number of employees available.
The need for more employees arises from the fact that there is an increase in the number jobs available. This increase is not commensurate with an increase in the number of employees. Hence, the labor demand is greater than the labor supply, and wages are forced upwards. Wal-Mart’s action is likely to set a wage floor, which will also force other employers to increase their prices.
Works Cited
Blinder, Alan S. "The Fed Can Be Patient About Raising Interest Rates." The Wall Street Journal 12 April 2015.
Sheehan, Tim. "March unemployment down in most of Valley." The Fresno Bee 17 April 2015.
Ziobro, Paul and Eric Morath. "Wal-Mart Raising Wages as Market Gets Tighter." The Wall Street Journal 19 February 2015.
Zumbrun, Josh. "Oil’s Plunge Could Help Send Its Price Back Up." The Wall Street Journal 22 February 2015.
