America's employers added a substantial 311,000 jobs in February, fewer than January's huge gain but enough to keep pressure on the Federal Reserve to raise interest rates aggressively to fight inflation.
In remarks at the White House on Friday, President Joe Biden touted the strong report as evidence that his administration's economic plan is successful.
What You Need To Know
- America's employers added a substantial 311,000 jobs in February, fewer than January's huge gain but easily enough to keep pressure on the Federal Reserve to raise interest rates aggressively to fight inflation
- The unemployment rate rose to 3.6% from a 53-year low of 3.4%, as more Americans began searching for work but not all found jobs
- Friday's report from the government made clear that the nation's job market remains fundamentally healthy, with many employers still eager to hire
"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 this matters, it's no accident. It means our our economic plan is working."
The unemployment rate rose to 3.6% from a 53-year low of 3.4%, as more Americans began searching for work and not all of them found jobs.
"Because of our economic plan, unemployment had been below 4% for 14 straight months since January 2022," Biden said. "Last month that unemployment rate remained near the lowest level in 50 years. People who were staying out of the job market, this is particularly good news, are now getting back into the job market. They're coming off the sidelines and getting back into the job market. The share of working-age folks on the labor force is higher than it's been anytime since 2008."
Friday's report from the government made clear that the nation's job market remains fundamentally healthy, with many employers still eager to hire. Fed Chair Jerome Powell told Congress this week that the Fed would likely ratchet up its rate hikes if signs continued to point to a robust economy and persistently high inflation. A strong job market typically leads businesses to raise pay and then pass their higher labor costs on to customers through higher prices.
Last month, the government reported a surprising burst of hiring for January — 517,000 added jobs — though that gain was revised down slightly to 504,000 in Friday's report. Consumers also ramped up their spending in January, suggesting that the economy had strengthened at the start of the year. The Fed's preferred inflation gauge also accelerated.
The jobs report was released one day after Biden debuted his budget for the 2024 fiscal year, a list of ambitious policy proposals the administration put forth both to serve as a list of the president's priorities and as a means of contrasting his plans to those of House Republicans. Biden said Friday that his plan is aimed at "build[ing] on the progress we made growing an economy from the middle out and the bottom up, and not the top down."
"It's a plan that keeps investing in American manufacturing, innovation and creates more good-paying jobs that don't require a college degree," the president said. "It protects and strengthens Medicare, Social Security, two bedrock programs Americans are paying into for every paycheck they've earned since they've been a kid."
"And we're paying for these investments," Biden continued, before touching on some of the plan's financial proposals, like increasing taxes on the wealthiest Americans and corporations. "We're paying for it all."
The president also took aim at his Republican opponents in Congress, blasting their economic proposals as regressive.
"[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.