The Federal Reserve is being too aggressive with its stance on interest rates and could send the job market into a tailspin, warns MKM Partners chief economist Michael Darda.
"I think households here are also caught in the Fed's crosshairs because the tightening is likely to keep going until it kills the labor market," Darda said on Yahoo Finance Live (video above). "They [the Fed] will kill inflation, but they are going to end up killing the labor market."
Cracks in the labor market are piling up as the economy slows amid determined Fed rate hikes.
This week brought reports of Intel laying off off thousands of workers amid a slowdown in PC sales. (Intel declined to comment to Yahoo Finance on the matter.) Beyond Meat is cutting 19% of its workforce. Meta is also reportedly culling workers, and other tech companies began cuts or hiring freezes earlier this year.
U.S. based employers announced 29,989 job cuts in September, a 46.4% increase from August, according to fresh data from outplacement firm Challenger, Gray & Christmas. The figure is a stunning 67.6% higher from the same month last year.
September marked the fifth time this year that job cuts were higher in 2022 than in the same month a year ago, the data showed.
Darda warned U.S. workers need to be prepared for the job related news flow to worsen moving forward.
"The labor market has been very strong and resilient," Darda explained. "That has been the saving grace. But this inflationary backdrop has certainly been an irritant to households. We can see that in a lot of weak confidence data. So far that hasn't been enough to stop the economy in its tracks. But we have the Fed tightening very aggressively, and that will hit the economy with a lag."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Click here for the latest trending stock tickers of the Yahoo Finance platform
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Related Quotes
Ark Invest CEO Cathie Wood doesn't doubt that the U.S is in a recession.
A recent analysis points to more than $30 billion of stimulus spending by states. That’s good for the economy, but also fuel for inflation.
A major shake-up at struggling Beyond Meat.
The only other Canadian city to appear on the bank's Global Real Estate Bubble Index is Vancouver in sixth place with a score of 1.70, sandwiched between Hong Kong and Amsterdam.
If people tighten their purse strings into the holiday season, economists say it makes the prospect of a recession in 2022 even more likely.
Twitter’s lawyers say they have demanded copies of 'substantive correspondence' which Musk had exchanged with federal authorities.
Economist and investing veteran Nick Sargen on official interest rates, bonds, the dollar and financial stability.
Trying to navigate through global market stresses is like "whack-a-mole," Citigroup Inc CEO Jane Fraser said on Friday, as she added the bank is constantly stress testing scenarios. Wall Street banking executives said they were keeping a close watch on markets, after the volatility in the U.K., with liquidity a particular focus. The UK government's "mini-Budget" on Sept. 23 triggered some of the biggest ever jumps in UK government bond yields and triggered a crisis among pension funds needing to find cash.
New and burgeoning real estate investors are generally fixated on property values, loan rates and, in the case of rental properties, potential monthly revenue. But many are finding that having the wrong insurance, especially for rental property, could result in losing almost every cent invested. Rental property insurance is more expensive and necessary, but there has been a history of investors lying about the rental status of the property to save money. This can result in a claim not being paid
Ari Evans And Olivia Evans Revocable Trust purchased the property located in the 7300 block of 89th Street in Los Angeles from Brothers Industries Llc Vandelay on July 7, 2022. The house built in 1951 has an interior space of 1,990 square feet for $2,025,000 which works out to $1,018 per square foot. The property features four bedrooms and two bathrooms as well as two parking spaces. The unit sits on a 6,300 square-foot lot.
Indonesia is preparing to start Southeast Asia’s first high-speed rail service that will cut travel time between two cities from the current three hours to about 40 minutes. The railway line, which connects Indonesia's capital Jakarta and Bandung, the heavily populated capital of West Java province, is part of China’s Belt and Road infrastructure initiative. As the Jakarta-Bandung portion of the rail project approached 90% completion, Indonesia’s President Joko Widodo on Thursday visited Bandung’s Tegalluar station — one of the railway’s four stations — where eight train cars and an inspection train that arrived from China in early September were parked.
Of the four generational cohorts currently in the working world, Gen Z is probably the least likely to depend on Social Security to fund their retirement. Social Security's cash reserves are expected…
JPMorgan Chase CEO Jamie Dimon thinks a soft landing is unlikely and is sounding the recession alarm.
Consumers can expect the price of Florida citrus to increase, partly because of Hurricane Ian.
Take your power back in a tough market
(Reuters) -The U.S. Treasury Department is asking primary dealers of U.S. Treasuries whether the government should buy back some of its bonds to improve liquidity in the $24 trillion market. Liquidity in the world's largest bond market has deteriorated this year partly because of rising volatility as the Federal Reserve rapidly raises interest rates to bring down inflation. The central bank, which had bought government bonds during the COVID-19 pandemic to stimulate the economy, is now also reducing the size of its balance sheet by letting its bonds reach maturity without buying more, a move which investors fear could exacerbate price swings.
U.S. stocks staged a massive turnaround on Thursday, erasing a plunge seen after the September consumer-price index came in higher than economists had expected, even though the data reinforced expectations the Federal Reserve will continue with large interest rate increases in coming months.
McKenna alleges he was wrongfully fired by Peloton and accused the company of discrimination, harassment and retaliation
Two children were shot Saturday after the men driving the cars they were in fired guns at each other during a road-rage incident on a Florida highway.
President Biden found himself on the receiving end of Republican fire over his failed prediction last December that the high inflation facing Americans had peaked.