The fact the high numbers were spread across the board, in nearly all job categories made for another banner report and showed, as previously reported, that the US economy has regained nearly all the jobs lost with the pandemic, after a nearly 14 percent loss in employment since in those early days.
The news was not so good that the Federal Reserve will cut interest rates, as Chair Jerome Powell has indicated after the recent Federal Open Market Committee meeting, but his caution is legendary as a data driven leader; but, some, including him, are hoping that will change in May, while others are not so sure.
He has said, “I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting.”
Standouts for January were professional and business services, a rather catch all term, say some, for a clutch of businesses, tech excepted, leading at 74,000, followed by health care at 70,000, which as we’ve seen has rapidly caught up with the pandemic losses.
The figure that was most watched, especially by Powell, was the wage increase of 0.6 percent, reaching a figure of 4.6 percent, that The New York TImes in their report, attributed to the plethora of white collar jobs, and their higher salaries.
Retail after some conservative holiday hiring was flat at 45,200.
“I think everyone is surprised at the strength,” said Sara Rutledge, an independent economics consultant. “It’s almost like a ‘pinch me’ scenario,” to the Times.
For President Biden who has faced criticism on inflation figures, despite a sizeable decrease, down to 3.1 percent in November, but now faces an increase in 3.4 percent, mostly attributable to increasing housing costs, this is not welcome news; but, the huge increase in employment is bound to be a boon to his reelection effort.
The low unemployment rate of 3.7 is notable, and “The fact that that’s been below 4 percent for two years running now is just a very clear and reliable signal that this is not just a tight labor market, but a reliably and persistently tight labor market,” said Jared Bernstein, chair of the White House Council of Economic Advisers.
“America’s economy is the strongest in the world. Today, we saw more proof,” said Biden in a statement.
Perhaps too strong?
“There is simply no way that 350,000 job gains in a month is consistent with a further cooling of the labor market. This elevates the risk that nominal wage growth will not fall back to levels consistent with reaching the inflation target on a sustained basis, particularly as the labor force participation rate refuses to rise any further,” Brian Coulton, Fitch Ratings economist, wrote in a Friday commentary, as reported by The Hill.
Wages increased by 0.8 percent to $34.55, :doubling the monthly pace of headline inflation in December.” But, that does exceed the stated goals of 3.5 percent growth to hit the Fed’s 2 percent inflation target.
In the area of consumer confidence, whose dollars drive the US economy, perception, as the old adage states, is one tenth of the law, and that confidence has grown according to the University of Michigan Consumer Sentiment Index,as high and this softening is real, according to Consumers Director, Joanne Hsu who wrote, “Consumer sentiment confirmed its early-month reading, surging 13% to reach its highest level since July 2021, reflecting improvements in the outlook for both inflation and personal incomes.”
Still some Americans are complaining about high costs, much of which may be attributed to the lingering effects of supply shortages, but as stated before, most of the pinch is felt in housing, especially in urban coastal areas. And, in contrast, polls show that, “Just 28 percent of Americans rated the economy as excellent or good, according to a Pew Research consumer survey of 5,140 adults from January 16th to the 21st, released Sunday,” according to The Hill.
Tacking high employment with increasing wages may be a delight to politicians, consumers, and some economists, but the delicate balancing act for the Federal Reserve is not over yet.
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