Friday, October 21, 2022

Georgia unemployment rate unchanged in September as state’s labor market continues to roll along

Georgia’s labor market saw the fourth straight month of low unemployment as the state’s unemployment rate remained unchanged at 2.8% in September.

While such a low unemployment rate is good news for job seekers, the fact that the state’s unemployment rate has steadied at this low level might indicate that labor market conditions have reached their peak employment levels.

Without an influx of new workers from outside the state or the decision of potential workers who have left the labor market to return to paying positions, Georgia employers face difficult decisions as to whether to operate without increasing their workforce or to increase their workforce by raising wages to lure workers.

In either case, the low unemployment rate puts stresses on the state’s economy and indicates the possibility of higher inflation in this full employment environment.

One sign of the stress in the labor market for employers is the dropping of the state’s labor force. From January to June, Georgia’s labor force grew by 73,830 (seasonally adjusted). Between June and September, the labor force dropped by 14,997.

The number of workers employed declined by 8,265 from June through September, while the number of unemployed workers dropped by 6,732. Potential workers are leaving the labor force, presumably because they feel they can financially afford the loss of a paycheck. Only a sharp reversal in the economy might bring them back to seek employment.

All these numbers explain why the Federal Reserve continues to focus on raising interest rates to slow the rate of inflation even if it means a slowing of the economy. Although the Fed has a dual mandate for both inflation and employment, it finds a present imbalance as unemployment continues to run below trend while inflation rates continue above trend.

It is impossible to precisely say when an economy is “overheating”, but the continued low unemployment rates along with high levels of inflation (at least compared to the recent past) may be indicators of an “overstimulated” economy.

Nonfarm employment

In September, the state’s nonfarm employment rose by 13,000, approximately the same number as in August. Private sector employment increased by 10,400, just below August’s revised increase of 11,900.

For the nine months ending in September, the state’s nonfarm total employment has increased by 160,200 compared to an increase of 133,500 for the same period in 2021.

In the private sector, jobs increased by 143,600 over the nine-month period, compared to 134,700 for the same period last year.

Both the total nonfarm and private sector nonfarm job numbers are new records for the state, as they have set new records each month since the end of last year.

Friday, October 14, 2022

Atlanta Federal Reserve Bank President Raphael Bostic: A terrible disappointment

On Friday afternoon, it was disclosed that the President of the Atlanta Federal Reserve Bank, Raphael Bostic, had failed to disclose financial transactions including ones that violated Federal Reserve trading rules.

In his amended Financial Disclosure Report under the Comments section, it reads:

“Consistent with the Federal Reserve’s enhanced ethics procedures, Board ethics officials reviewed Reserve Bank presidents’ financial disclosures beginning this year. In the course of reviewing Raphael Bostic’s disclosure, we discovered that he filed materially incomplete annual disclosures during all prior years in office. After he spent several months retrieving information and amending his disclosures, we concluded that (1) he omitted a substantial number of securities transactions from the disclosures that he previously filed; (2) he held more than $50,000 of Treasury funds in violation of then-applicable Board policy; and (3) he had extensive trading activity during FOMC trading blackout periods and during March-April 2020, which he explains was carried out by third-party financial advisors with investment discretion within managed accounts. The certification of this report is based on the understanding that he has now corrected his prior disclosures and divested his Treasury funds (and other funds that are now prohibited by the Investment and Trading Policy for FOMC Officials), and he and his financial advisor have affirmed that all future trades will be compliant with Federal Reserve policies. His past violations were referred to the Board for any additional action that it deems appropriate.”

From the statement above, it appears that Mr. Bostic did not self-disclose his violations but only admitted to them after they were discovered by Board ethics officials.

In his defense, Mr. Bostic asserts that he did not manage the investments themselves and was unaware of the trades or their timing.

In a news release issued by the Federal Reserve Bank of Atlanta Board Chair Elizabeth A. Smith, it says:

“The Federal Reserve Bank of Atlanta's board of directors has been made aware of inaccuracies in President Raphael Bostic's forms that disclose his personal financial assets and transactions. Furthermore, we learned of transactions that took place during blackout periods and of holdings that violated guidelines set out by the Federal Open Market Committee, or FOMC.

After reviewing the documents and discussing these issues with President Bostic and the Atlanta Fed's chief ethics officer, the board acknowledges the violations and accepts President Bostic's explanation. My board colleagues and I have confidence in President Bostic's explanation that he did not seek to profit from any FOMC-related knowledge.

The directors appreciate that President Bostic has thoroughly corrected his financial forms, going back to when he first joined the Atlanta Fed. We are satisfied with his revised financial disclosures and the changes he has made in managing his investments. The board is also satisfied that President Bostic has established procedures to ensure that future violations do not occur.”

What now?

As the New York Times notes, this is not the first trading scandal involving the Federal Reserve, and you would have thought that the previous problems would have made Mr. Bostic more cautious in his financial activities.

As Jeanna Smialek writes for the Times:

The Fed’s independent watchdog investigated each official’s trades, much as it will now investigate Mr. Bostic’s. It largely absolved the Fed vice chair, though the results of the other two investigations have yet to be released. Both of the Fed presidents in question — Robert Kaplan and Eric Rosengren — left their posts, and the vice chair, Richard Clarida, stepped down earlier than expected. Other explanations were given for some of those resignations. The central bank ushered in a new and much stricter set of stipulations that limit when, how and what central bankers can trade.”

In any case, Mr. Bostic has destroyed his own credibility as a commentator on economic matters and damaged the Atlanta Federal Reserve Bank’s credibility as well, and it was all so unnecessary. The President of the Atlanta Federal Reserve Bank is a very responsible position and is well compensated. Was the small additional income from these trades really needed? Was it worth the damage to his reputation just to make an additional few dollars? Or did he just think he wouldn’t be caught?

The Atlanta Fed runs an extensive education program, but all that is wasted if the person at the head of the bank cannot be trusted. Whether Mr. Bostic resigns or stays on will depend, probably, on how much pressure is brought to bear, but in either case, his reputation, and the reputation of the Federal Reserve Bank of Atlanta has been damaged with longer lasting consequences. A terrible disappointment. 

Thursday, October 13, 2022

Atlanta area consumers continue to face rising costs as grocery prices rise 15.5% over the year, the fastest increase since the 1970s

Consumers in the Atlanta area continued to see significant increases in their grocery costs, rent, and gasoline costs in September, according to new information provided by the U.S. Bureau of Labor Statistics.

Food at home

Atlanta area consumers saw their grocery food costs rise by 1.0% in September, which despite being a significant monthly increase, was the lowest monthly change since December. Between January and August of this year, monthly food costs had increased between 1.1 to 2.0% each month.

As a result of the continued large monthly increases, costs for food at home advanced 15.5% over the year. Consumers in the Atlanta area are experiencing annual increases in grocery costs that have not been seen since 1974, which means most Atlanta consumers have not seen these levels of increases in grocery costs in their lifetimes.

A full list of changes in consumer prices for all urban consumers in the Atlanta-Sandy Springs-Roswell, Ga., area, not seasonally adjusted, is provided by BLS for even-numbered months, while a partial list is provided in odd-numbered months (January, March, May, July, September, and November).


For most consumers, housing comprises the largest part of their budget, followed by food and transportation.

In September, rents increased 0.9% over the month, the smallest monthly increase since March. Over the year, rents in the Atlanta area rose by 12.9%, a smaller annual increase than recorded in August. Renters would have to go back to 1980 to see the equivalent of the annual rent increases being experienced in the summer of 2022 in the Atlanta area.

Owners’ equivalent rent of residences advanced 1.3% in September, less than the 1.7% increase recorded in August. Over the past 12 months, owners’ equivalent rent has grown by 14.0% making it nearly equivalent to the 12-month increase recorded in August.


Gasoline prices declined for the third consecutive month, dropping 8.1% in September, a smaller decrease than experienced in August. Despite recent declines, gas prices in the Atlanta area stood 10% above the levels recorded in September 2021. The increase comes despite the Georgia governor’s decision to continue to suspend the state’s motor fuel tax, which moderated the cost of gasoline to consumers in the state.

Atlanta compared to the U.S.

Compared to the U.S. overall, Atlanta consumers are experiencing faster rising costs for food at home, rent, and owners’ equivalent of rent, while seeing slower increases in the cost of gasoline.

Nationally, costs for food at home increased 0.6% over the month and rose 13.0% for the 12 months ending in September.

Rent increased 0.9% over the month and rose 7.2% over the year, while owners’ equivalent rent advanced 0.8% over the month and 6.7% over the year.

Gasoline prices for the nation fell 5.6% in September, but posted a 18.2% increase for the 12 months ending in September.