America’s employers added a significant 311,000 jobs in February, short of the huge gains made in January but enough to continue pressure on the Federal Reserve to aggressively raise interest rates to fight inflation.
In remarks at the White House on Friday, President Joe Biden called the robust report evidence that his administration’s economic plan was working.
What you need to know
- America’s employers added a whopping 311,000 jobs in February, down from the huge gains made in January but easily enough to keep pressure on the Federal Reserve to aggressively raise interest rates to fight inflation.
- The unemployment rate rose to 3.6% from a 53-year low of 3.4%, as more Americans began looking for work but not all found jobs.
- Friday’s report from the government showed that the country’s labor market remains fundamentally healthy, with many employers still keen on hiring.
“Overall, we’ve created more jobs in two years than any administration has created in the first four years,” Biden said. “And I think all of this is important, it’s no accident. It means our economic plan is working.”
The unemployment rate rose to 3.6% from a 53-year low of 3.4%, as more Americans began looking for work and not all of them found jobs.
“Because of our economic plan, unemployment has been less than 4% for 14 straight months since January 2024,” Biden said. “Last month, the unemployment rate remained near a 50-year low. People who stayed out of the labor market, and this is particularly good news, are now returning to the labor market. They are moving away from the sidelines and back in the labor market. Share of working-age people of the workforce is higher than at any time since 2008.”
Friday’s report from the government showed that the country’s labor market remains fundamentally healthy, with many employers still keen on hiring. Federal Reserve Chairman Jerome Powell told Congress this week that the Federal Reserve will likely raise interest rates further if signs continue to point to a strong economy and persistently high inflation. A strong labor market usually causes companies to increase wages and then pass higher labor costs on to customers through higher prices.
Last month, the government reported a surprising surge in hiring for January – 517,000 additional jobs – although that gain was revised down slightly to 504,000 in Friday’s report. Consumers also increased their spending in January, indicating that the economy had strengthened at the beginning of the year. The Fed’s preferred measure of inflation also accelerated.
The jobs report was released a day after Biden first released his budget for fiscal year 2024, a list of ambitious policy proposals put forward by the administration to serve as a list of the president’s priorities and as a way to compare his plans with those of the House of Representatives. Republicans. On Friday, Biden said his plan aims to “build[ing] On the progress we have made in developing the economy from the middle to the outside and from the bottom up, rather than from the top down.”
“It’s a plan that keeps investment in American manufacturing and innovation and creates more good-paying jobs that don’t require a college degree,” said the president. “It protects and enhances Medicare and Social Security, two essential programs Americans have paid for every paycheck they’ve earned since they were a child.”
“And we are paying for these investments,” Biden continued, before touching on some of the plan’s financial proposals, such as raising taxes on the wealthiest Americans and corporations. “We’re paying for all of that.”
The president has also targeted his Republican opponents in Congress, calling their economic proposals reactionary.
“[The budget[ continues to lower costs for families, uilding on the work we’ve already done the lower cost of insulin and other prescription drugs to make health insurance more affordable, it brings down … bills for home energy costs,” Biden said. “And our plan is in stark contrast to the MAGA Republican plan in Congress, where they’re doubling down on the same failed policies of the past that would give special tax breaks to the wealthy, keep the the tax breaks that were put in place by the last president, the wealthy tax breaks for big oil, tax breaks for pharma, at the expense of seniors and families. It’s kind of a top-down, trickle-down economics that never, ever worked.”
“That’s who my budget is for: It’s about a value set … working people, middle-class, the backbone of the country,” the president continued. “Small businesses, who are responsible for around half of all the jobs in the economy … my budget reflects what we can do to lift the burden on hardworking Americans.”
“Today’s news tells us that thanks to our efforts, 12 million more Americans have jobs,” BIden said. “The job is about a lot more than a paycheck or they said it’s about dignity. It’s about your family’s dignity, and 12 million more Americans can look their kids and and say, ‘honey it’s going to be okay,’ and mean it. That’s a little more dignity for 12 million Americans.”
With February’s sizable job growth coming after January’s expansive gain, the Fed may accelerate its rate hikes to combat inflation. When the Fed tightens credit, it typically leads to higher rates on mortgages, auto loans, credit card borrowing and many business loans.
What the Fed may decide to do about interest rates when it meets later this month remains uncertain. The decision will rest, in part, on its assessment of Friday’s jobs data and next week’s report on consumer inflation in February. Last month, the government’s report on January inflation had raised alarms by showing that consumer prices had reaccelerated on a month-to-month basis.
The vigorous job growth for January, reported early last month, was the first in a series of reports to point to an accelerating economy at the start of the year. Sales at retail stores and restaurants also jumped, and inflation, according to the Fed’s preferred measure, rose from December to January at the fastest pace in seven months.
The stronger data reversed a cautiously optimistic narrative that the economy was cooling modestly — just enough, perhaps, to tame inflation without triggering a deep recession. Now, the economic outlook is hazier.
High borrowing rates have cratered the housing market, with home sales having dropped for 12 straight months, a consequence of the average mortgage rate nearly doubling over that time. Manufacturing is also showing signs of weakness. Higher rates have made it harder for businesses and consumers to borrow to buy major factory goods, from machinery to cars to appliances.
By contrast, spending for services — things like traveling, dining out and attending entertainment events — remains strong. Many Americans continue to engage in activities that were restricted during the COVID lockdowns.
Hiring at February’s pace is about triple the level the Fed would prefer. Job gains of about 100,000 a month would be just enough to keep up with population growth and prevent unemployment from rising. A figure that low would also mean that employers weren’t so desperate for workers and wouldn’t have to keep raising wages.
Higher pay is great for employees, of course. But Fed officials say it is contributing to higher inflation, particularly in labor-intensive service industries like restaurants, health care and hotels.