Entry-level jobs down by a third since launch of ChatGPT

> It also coincides with the end of the post-pandemic hiring boom and the UK bank rate going from 0.1% to 5.25%.

I agree that the former is a strong signal. However the latter doesn't tell you anything without further context: did interest rates go up, because the economy was strong, or did rising interest rates dampen the economy?

(It's similar to how you can't tell how hot it is in my apartment, purely from looking at my heating bills: does a low heating bill mean that it's cold in my flat, because I'm too cheap too heat? Or does a low heating bill mean it's summer and really hot anyway?)

> did interest rates go up, because the economy was strong, or did rising interest rates dampen the economy?

It doesnt matter. Whether it went from strong -> weak or weak -> weaker is beside the point, the question is if genAI is the main reason for entry level job loss and raising interest rates are another possible answer.

In this case it was widely publicised that interest rates went up to try to bring inflation down (which was significantly above the 2% target).

Growth was weak to unremarkable although the hiring market was good for job seekers at the time shortly before the interest rises were introduced.

Yes, if you bring in more context interest rates can be enlightening. But by themselves they are almost useless information.

Growth in the US, and Europe to a lesser degree, was very strong in this period, so it was natural that their interest rates went up. And when interest rates go up in the UK's two primary trading partners, it doesn't really have any choice but to hike rates with them, lest people flee the pound and make inflation even worse. It was unfortunate that this had to happen in a weak growth regime, but the British economy is such a boondoggle at the moment I don't think the alternative would've been any better.

Alas, it would be better if the Bank of England had a nominal GDP level target, and then they could let inflation, exchange rate and interest rates be what they may in order to reach the nominal spending target.

interest rates are controlled by central bankers, not magic. they make decisions based on their analysis of the economy. they raised rates to slow down the rate of investment and to suppress wages, in order to get inflation under control. Less money in circulation means reduced demand means prices stay lower, meaning lower inflation. that's the theory anyway, and the explictly expressed reason for raising rates by central banks. there's no mystery about it.

So here you are suggesting that when we observe that interest rates have been raised, we should conclude that the economy was strong? (Otherwise the central bankers wouldn't have raised.)

But the original comment I first replied to seemed to suggest that high interest rates should lead us to deduce a weak economy.

I don't know if you're being intentionally obtuse but it doesn't matter what caused the increase in rates. The increase results in people and companies having less money to spend and investment being more expensive (by design). This means less hiring.

you raise interest rates to slow economic activity, you lower them to speed it up. yes, if interest rates are raised, that means employment is too high, basically, and they want to lower it.

> yes, if interest rates are raised, that means employment is too high, basically, and they want to lower it.

Not directly. The Bank of England targets inflation, not employment.