Why Is The Price Of Most Items Increasing Despite The Rise In Production As Businesses Hire More?

In this Discussion, we use the February 4, 202212:41 PM ET Labor market report of the National Public Radio(NPR), the section on 

"Stronger job gains expected" and "Tight job market leads to higher wages and prices" attached below.

Stronger job gains expected

The omicron wave likely did discourage some employers from hiring last month, and kept some workers on the sidelines. But the fallout was much less than expected.

"We have an economy that is learning to continue to function even in the face of a wave such as omicron," said White House economic adviser Cecelia Rouse.

The 467,000 jobs added in January represents only a modest slowdown from December, when employers added more than half a million jobs. And the spike in omicron infections, while severe, has already begun to recede.

Daily infections after peaking above 800,000 two weeks earlier.

Employers are keen to hire even more workers. The Labor Department counted nearly 11 million open jobs at the end of December. Surveys by the payroll processing company ADP show a large share of employers plan to add workers over the next six months.

Why Is The Price Of Most Items Increasing Despite The Rise In Production As Businesses Hire More?

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"All of this data suggests that the recovery from omicron could be swift as the spread is contained," said Nela Richardson, ADP's chief economist.

But the labor market's outlook will still depend on the progress of the pandemic.

Changes in the public health outlook can easily sway demand for workers especially at businesses such restaurants that rely heavily on in-person contact with customers. Restaurants and bars added 108,000 jobs last month.

Tight job market leads to higher wages and prices

The economic recovery has been hobbled at times by a shortage of available workers. When the coronavirus first hit the U.S. almost two years ago, millions of people stopped working or looking for work. As the pandemic has dragged on, some would-be workers have been slow to return. in an effort to regain control over inflation. Consumer  from a year ago the sharpest increase in nearly 40 years.


After reading and listening the above labor market report from the NPR, respond to the following question.


Why is the price of most items increasing despite the rise in production as businesses hire more? Your answer cannot have more than 500 words.

To successfully answer this question, use chapter 4: The section on Demand, the section on Supply, and the section on the Impact of a shift on Demand and or Supply on the market equilibrium price and quantity traded.


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