NEW YORK, November 1, 2022 (Newswire.com) - The Fed is the Federal Reserve System. It's the central banking system the U.S. implemented in 1913. It exists to provide some degree of centralized control over the American economy.
The Fed can't completely control every aspect of the economy, but certain moves that it makes can help regulate and sometimes prevent significant economic changes. Right now, the Fed is predicting that unemployment is going to rise in the near future.
You might not be thrilled to hear that. However, before you look into debt consolidation while unemployed, take some time to read about which professions are liable to start shedding jobs and which ones should remain relatively stable.
Why is Unemployment Going to Rise Soon?
Part of what the Fed does is combat inflation. Inflation means that the average cost of goods and services is rising. That has been happening at an accelerated rate in recent months due to several domestic and international factors.
The Fed can fight inflation by instituting a rate increase that impacts anyone who wants to borrow money from banks and other traditional lending entities. In theory, that means individuals will be more reluctant to borrow and spend money, and the economy will slow. In time, this forces entities that sell products and services to reduce their prices.
Unfortunately, this action also means some companies will not have as much demand for labor. When that happens, layoffs inevitably follow. That's why, when the Fed says it's going to hike interest rates for borrowers, you will also nearly always see the unemployment rate rise.
What Industries Will Shed Jobs the Fastest?
There's no reason for panic, though, since not all industries will shed jobs at the same rate. Certain recession-proof or nearly recession-proof niches will probably not shed any jobs at all.
Right now, the unemployment rate is about 3.7%. When you look at the nation's history, that's pretty good. The Fed feels that once it sets its rate hikes in motion, the number of unemployed individuals should swell to about 4.4% at this time next year.
That's not ideal, but it's still nowhere near the unemployment rates accompanying major recessions or economic downturns. Historically, those who lose their jobs the most when these downturns occur are less-educated workers. That is because their jobs are seen as more expendable than better-paying ones.
When you think about those most likely to lose their jobs in the coming year, you can probably include food service industry workers and construction workers. Undocumented workers are less likely to find steady work since some employers are already paying them off the books.
You might also see stores getting rid of cashiers, stockers, dishwashers, or any other positions they feel aren't as essential to the company's continued success. During economic downturns, when companies feel the need to make sacrifices to protect their bottom line, they'll often scale back the number of workers on staff and give those who remain more responsibilities.
What Will This Mean for You?
What higher unemployment numbers mean for you will depend largely on what kind of job you have. The Fed adjusting rates typically has a ripple effect on the economy.
Even if you're not going to lose your job, you might see companies tighten the purse strings however they can. That might mean your boss won't give you the raise that you expected or an increase in your paid vacation days.
Undocumented workers, stockers, clerks, cashiers, construction workers, and similar jobs may dwindle in the coming year. If you work at any of these jobs, you may need to consider a backup plan if your company elects to cut your hours or eliminate your position. If you work in a field like education, healthcare, or transportation, you're probably safe.