Employment Policies Beyond the Election
Last month, job growth was way below expectations. It’s time to look harder at how major decision makers effect employment policies. We are all waiting expectantly for the results as articles pop up speculating on the future of our economy. It’s not just slow job growth, it low gas prices and the pressure the federal reserve feels to keep interest rates low. All are policies essential to the propelling the economy forward. In this installment of Employment Polices 101, we will discuss the impact that OPEC and the Federal Reserve have on the U.S. economy.
Oil prices
If you have not picked up on it lately, oil prices have been uncommonly low. Most of us have been celebrating that relief at the pump. After all, cheap oil leads to increased productivity in the United States. There are other effects though. The United States was winning more market share in oil, once again becoming a competitive exporter. As we speak OPEC is letting the oil flow fairly freely and inexpensively. Gas prices are declining steadily and OPEC met recently to decide whether or not to cap oil production. It would be smart move in the long run. Oil is a limited resource and less of it in the market keeps the value higher. However it seems that political and economic factors are interfering with their ability to come to a consensus. The lack of solidarity is weakening OPEC, but not quickly enough. You see, Saudi Arabia has led the charge to push the price of oil so low that many North American oil and gas companies could not keep up. Eighty-one filed bankruptcy from 2015 to May of this year. OPEC’s decision may mean increased productivity but at the expense of the American oil industry.
Interest Rates
The economy has been sending everyone mixed signals, including the Federal reserve. They recently announced the decision not to raise their benchmark interest rate. The goal is to keep consumers spending. When interest rates finally do rise, the ascension will be slow and steady. What does this mean? It means that our nation’s financial authority expects glacial growth to persist throughout the economy. Employers are likely to make conservative hiring decisions in the face of this level of uncertainty.
As the current presidential administration comes to an end, we must look our future decision makers to help counter balance economic slowdowns. Low oil prices are great, but cause destabilization and potential political friction. Low Interest rates are also great in the short term, but signal slow growth.
Check back in next month for our next installment of Employment Policies 101.
Are you looking for more market insights. There’s a page for that.