America’s employers added one other flood of jobs in March, adding a whopping 303,000 employees to their payrolls, boosting hopes that the economy can beat inflation without falling into recession amid high rates of interest.
Job growth last month rose from a revised 270,000 in February and was well above the 200,000 forecast by economists. By all measures, it was a month of strong hiring, reflecting the economy’s ability to resist pressure from high borrowing costs resulting from the Federal Reserve’s rate hikes. As the country’s consumers proceed to spend, many employers have continued to rent to fulfill regular customer demand.
Friday’s Labor Department report also showed the unemployment rate fell to three.8% from 3.9% in February. That rate has now been below 4% for 26 consecutive months, the longest such increase because the Sixties.
The economy is bound to weigh on Americans because the November presidential election approaches and so they evaluate President Joe Biden’s re-election. Many people still feel under the pressure of the wave of inflation that broke out in spring 2021. Eleven rate of interest hikes from the Fed have helped inflation fall from its peak over the past yr and a half. But average prices are still about 18% higher than in February 2021 – a fact for which Biden may pay a political price.
Fed policymakers are monitoring the state of the economy, the labor market and inflation to find out when to start cutting rates of interest from their decade-long highs – a move supported by Wall Street traders, corporations, home buyers and People who need a automotive is eagerly awaited. Appliances and other major purchases which are typically financed. Fed rate cuts would likely result in lower borrowing rates across the economy over time.
Central bank policymakers began raising rates of interest two years ago to curb inflation, which hit a four-decade high in mid-2022. This one Interest rate increases – 11 of them from March 2022 to July 2023 – helped to dramatically slow inflation. Consumer prices rose 3.2% year-on-year in February, well below the year-ago peak of 9.1% in June 2022.
Still, it was widely expected that the sharp rise in borrowing costs for people and businesses resulting from the Fed’s rate of interest hikes would trigger a recession with waves of layoffs and a painful rise in unemployment. But to the surprise of virtually everyone The economy has continued to grow steadily and employers have continued to rent at a healthy pace. Layoffs remain low.
Some economists consider so a rise in productivity – the quantity of output that employees produce per hour – made it easier for firms to rent recent employees, raise wages and make higher profits without having to lift prices. Furthermore, the influx of immigrants into the labor market is anticipated to have addressed labor shortages and slowed upward pressure on wage growth. This helped inflation cool whilst the economy continued to grow.
Meanwhile, the Fed has signaled that it’s prone to cut rates of interest 3 times this yr. However, it’s waiting for more inflation data to stay confident that annual price increases are moving towards the two% goal. Some economists are wondering whether the Fed might want to cut rates of interest any time soon given the continued robust U.S. economy.
