The U.S. added 517,000 jobs last month, smashing Wall Street estimates, while the unemployment rate fell to 3.4 percent, its lowest level since May 1969, the Bureau of Labor Statistics said Friday.
But the “astonishingly strong” report may present the Federal Reserve, who only just slightly slowed its aggressive, inflation-fighting interest rate increases, with a bit of a challenge.
“This is a labor market on heat; nobody would have expected a number as monstrous as this,” Principal Asset Management’s Seema Shah told CNN, though the outlet’s David Goldman sounded more of an optimistic note: “What does it all mean? The US economy is not in a recession,” Goldman wrote Friday. “Despite the Federal Reserve’s efforts to slow the economy to cool inflation, the labor market just refuses to quit.”
The job growth was widespread, though leisure and hospitality posted the most gains of all sectors. The labor force participation rate, which measures the percentage of the population that is either working or actively looking for work, remained unchanged at 62.4 percent. Per The New York Times, the Fed had wanted to see that number go up. Stocks, meanwhile, plummeted in the report’s wake, as investors eager the central bank might soon pause rate hikes saw those hopes dashed.
A useful summary of the jobs report. It's all good news.
My meta-theory of why so many people have been wrong about the economy for so long is that many economists (and econ journos) are incapable of acknowledging that sometimes good things happen.https://t.co/tc6DunwAZ1
— Justin Wolfers (@JustinWolfers) February 3, 2023
If all this sounds contradictory, it’s probably because … it sort of is, The Washington Post notes. Still, however, “the labor market remains formidable, inflation is beginning to normalize, and there are signs that the global economy may be on stronger footing than originally feared.”
“Many people have assumed the US economy will tip into a recession this year,” Nick Bunker, head of economic research at Indeed Hiring Lab, said Friday. “But with each new batch of labor market data, those prospects seem to dwindle.”
“We should take today’s employment report with a grain of salt — lots of people who know these numbers well warned in advance of statistical noise,” economist and Times opinion columnist Paul Krugman added on Twitter. “But it’s clear that we have, in fact, been experiencing a … Biden boom.”