Projections from the Federal Open Market Committee (FOMC) show that the fight against inflation will become unbearable for the American labor market in the next few years.
According to data released in September 2022, FOMC members anticipate that the unemployment rate will rise to 3.8% by the year's end. Throughout 2023, that number will rise to 4.4%, where it will remain through 2024. This surpasses the original projections made earlier this year, and by 2024, the FOMC estimates that an additional 1.5 million Americans will become unemployed. While increases in unemployment were expected in the fight against inflation, as rising interest rates lead to struggling companies laying off employees, the FOMC predicts that a recession could be around the corner if this saga progresses too quickly.
FOMC experts also say that this number could be even higher, as the unemployment rate only counts Americans who are out of work and actively looking for a job. However, numerous Americans are out of work due to other reasons that have rendered them unwilling or unable to participate in the job market. A poll from the U.S. Chamber of Commerce in 2021 shows that less than half of Americans who lost their jobs during COVID reported they were actively looking for a job.
Politicians on both sides of the aisle have rallied behind labor force activists who claim that the federal government's response to inflation has been mismanaged. In June, these activists held a rally outside the central bank's headquarters in Washington D.C. to insist that policymakers more carefully consider workers in their inflation strategies. Federal Reserve Board Chair Jerome Powell told the public that they should anticipate softening as inflation is curbed, and allowing prices to surge would create an even more significant problem in the future.
"If we want to set ourselves up and really light the way to another period of a very strong labor market, we have got to get inflation behind us," Powell said in a press conference. "I wish there were a painless way to do that. There isn't."