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Steady U.S. Job Growth Sets Stage for Fed to Raise Interest Rates Steady U.S. Job Growth Sets Stage for Fed to Raise Interest Rates
(about 3 hours later)
Even the weather cooperated. Pretty much all the ingredients needed for a rousing display of labor market strength lined up in February, with gains in payrolls, wages and the size of the overall work force. A wave of hiring in February — President Trump’s first full month in office — pointed to a strong foundation for the nation’s economy, providing further evidence for the Federal Reserve that the moment to raise interest rates has come.
The strong monthly jobs report on Friday — representing President Trump’s first full month in office — should sweep away any last-minute reservations harbored by Federal Reserve policy makers about raising the benchmark interest rate when they meet next week. The Labor Department reported a gain of 235,000 jobs and healthy wage growth in a month when even the weather cooperated. It was the last major data release before Fed policy makers meet Tuesday and Wednesday, when they have signaled their intent to increase the benchmark interest rate.
“The economy is riding a wave of bullish sentiment postelection,” said Andrew Chamberlain, chief economist at Glassdoor, a career website. “We’re seeing strong labor demand across the board and no sign of slowing right now.”“The economy is riding a wave of bullish sentiment postelection,” said Andrew Chamberlain, chief economist at Glassdoor, a career website. “We’re seeing strong labor demand across the board and no sign of slowing right now.”
With the Labor Department reporting a gain of 235,000 jobs for the month, Republicans and Democrats quickly jostled for credit. Republicans and Democrats quickly jostled for credit.
Sean Spicer, the White House press secretary, said of Mr. Trump, “He’s jump-started job creation, not only through his executive action but because of the surge in economic confidence and optimism that has been inspired since his election.” Sean Spicer, the White House press secretary, said Mr. Trump had “jump-started job creation, not only through his executive action but because of the surge in economic confidence and optimism that has been inspired since his election.”
Mr. Trump, who, as a candidate, repeatedly dismissed the official jobs reports as phony, reposted a comment on Twitter from the conservative website Drudge Report that said, “GREAT AGAIN: +235,000.” Mr. Spicer later quoted Mr. Trump on his faith in the report, “They may have been phony in the past, but it’s very real now.” Mr. Trump, who, as a candidate, repeatedly dismissed the official jobs reports as “phony,” reposted a comment on Twitter from the conservative website Drudge Report that said, “GREAT AGAIN: +235,000.” Mr. Spicer later quoted Mr. Trump on his faith in the report, “They may have been phony in the past, but it’s very real now.”
But Republican self-congratulation clearly irked Democrats. Tom Perez, labor secretary in the Obama administration and now chairman of the Democratic National Committee, countered that Mr. Trump had “absolutely nothing” to do with the job gains. “Trump inherited an economy from Barack Obama with the longest streak of private sector job growth in history,” he said. The Labor Department repeated that it had not changed the way it collected and analyzed jobs data since Mr. Trump took office. “It’s business as usual,” said Megan Kindelan, director of public affairs at the Bureau of Labor Statistics.
(The Labor Department repeated that it had not changed the way it collected and analyzed jobs data since Mr. Trump took office. “It’s business as usual,” said Megan Kindelan, director of public affairs at the Bureau of Labor Statistics.) The Republican self-congratulation clearly irked Democrats. Tom Perez, labor secretary in the Obama administration and now chairman of the Democratic National Committee, countered that Mr. Trump had “absolutely nothing” to do with the job gains. “Trump inherited an economy from Barack Obama with the longest streak of private sector job growth in history,” he said.
Although the economic anxiety that helped put Mr. Trump in the White House remains, the official jobless rate is near what the Fed considers full employment — a threshold where, in theory at least, everyone who wants a job at the going rate can find one. The official jobless rate fell to 4.7 percent, from 4.8 percent in January. Although the economic anxiety that helped put Mr. Trump in the White House remains, the official jobless rate is near what the Fed considers full employment — a threshold where, in theory at least, everyone who wants a job at the going rate can find one. The official jobless rate fell to 4.7 percent, from 4.8 percent in January, even as the overall labor force grew.
At the same time, jobless claims are near a 44-year low, and the stock market is surging. Revisions to January’s estimates raised the three-month average of monthly job gains to 209,000 and annual wage growth to 2.8 percent, further bolstering the case for those who argue the economy is strong enough to withstand a rate increase. At the same time, jobless claims are near a 44-year low, and the stock market is surging. Revisions to previous estimates raised the three-month average of monthly job gains to 209,000 and annual wage growth to 2.8 percent, further bolstering the case for those who argue the economy is strong enough to withstand a rate increase.
The overall economic momentum received a push from February’s unusually warm weather, with almost a quarter of the jobs — about 58,000 — coming from construction. Manufacturing and mining rose too.The overall economic momentum received a push from February’s unusually warm weather, with almost a quarter of the jobs — about 58,000 — coming from construction. Manufacturing and mining rose too.
Also significant was the increase in the labor participation rate to 63 percent, a result of rising employment even among people without a high school diploma. “There’s got to be some optimism that these people are feeling they finally have a chance,” said Diane Swonk, founder and chief executive of DS economics in Chicago.Also significant was the increase in the labor participation rate to 63 percent, a result of rising employment even among people without a high school diploma. “There’s got to be some optimism that these people are feeling they finally have a chance,” said Diane Swonk, founder and chief executive of DS economics in Chicago.
On the other end are employers who are seeing acute labor shortages. “They’re offering training programs now,” Ms. Swonk said. “They’re complaining about it. But that’s what tight labor markets do. It forces you to invest more to work with less.”On the other end are employers who are seeing acute labor shortages. “They’re offering training programs now,” Ms. Swonk said. “They’re complaining about it. But that’s what tight labor markets do. It forces you to invest more to work with less.”
Bigger paychecks are something that most Americans, after years of stagnant wage growth, are particularly eager to see. The Fed, too, has been waiting for an increase, but it is also wary of wages rising too fast. The board’s members want to head off incipient inflation without putting the brakes on hiring, especially because the benefits of the eight-year-old recovery have been so unevenly distributed. Bigger paychecks are something that most Americans are particularly eager to see, after years of stagnant wage growth. The Fed, too, has been waiting for an increase, but it is also wary of wages rising too fast. Its members want to head off incipient inflation without putting the brakes on hiring, especially because the benefits of the eight-year-old recovery have been so unevenly distributed.
Balancing those two goals is tricky.Balancing those two goals is tricky.
Lauren Griffin, senior vice president at Adecco Staffing USA, said the scarcity of qualified workers had compelled employers to raise wages, strengthen benefits and improve amenities at the office. “We’ve got people in orientation classes,” Ms. Griffin said, “and they get up and leave because they’re contacted about another job that might be more money.”Lauren Griffin, senior vice president at Adecco Staffing USA, said the scarcity of qualified workers had compelled employers to raise wages, strengthen benefits and improve amenities at the office. “We’ve got people in orientation classes,” Ms. Griffin said, “and they get up and leave because they’re contacted about another job that might be more money.”
At the same time, a broader measure of unemployment — which includes the millions of Americans who have given up looking for work altogether or are working part time but would prefer full-time jobs — dropped to 9.2 percent last month but is still high given how tight the labor market looks otherwise. At the same time, a broader measure of unemployment — which includes the millions of Americans who have given up looking for work or who are working part time but would prefer full-time jobs — dropped to 9.2 percent last month but is still high given how tight the labor market looks otherwise.
Cautioning the Fed against moving too quickly with a rate increase, Elise Gould, an economist at the left-leaning Economic Policy Institute, noted that, “Workers throughout the economy, including young workers, workers of color, and low-wage workers, need a chance to make up lost ground on wage growth.”Cautioning the Fed against moving too quickly with a rate increase, Elise Gould, an economist at the left-leaning Economic Policy Institute, noted that, “Workers throughout the economy, including young workers, workers of color, and low-wage workers, need a chance to make up lost ground on wage growth.”
Many Americans who live outside urban centers also have been shut off from most of the recovery’s rewards. Many Americans who live outside urban centers also have been excluded from most of the rewards of the recovery.
Large metropolitan counties have had more than twice the annual wage growth of nonmetropolitan areas, according to the latest figures from the Bureau of Labor Statistics.Large metropolitan counties have had more than twice the annual wage growth of nonmetropolitan areas, according to the latest figures from the Bureau of Labor Statistics.
“Higher-wage jobs might be following educated, young workers, who are increasingly living in dense, urban neighborhoods as other demographic groups move to the suburbs,” said Jed Kolko, chief economist at Indeed, a job-search site. “Broader economic shifts also favor big cities: The occupations projected to grow tend to be more urban, while shrinking sectors like manufacturing and farming tend to be located outside large metros.”“Higher-wage jobs might be following educated, young workers, who are increasingly living in dense, urban neighborhoods as other demographic groups move to the suburbs,” said Jed Kolko, chief economist at Indeed, a job-search site. “Broader economic shifts also favor big cities: The occupations projected to grow tend to be more urban, while shrinking sectors like manufacturing and farming tend to be located outside large metros.”
That is disappointing for people with longstanding ties to smaller, more rural communities. “A lot of this has to do with mobility,” said Steven W. Rick, chief economist at CUNA Mutual Group, an insurance company. “People are going to have to move where the jobs are and not expect the jobs to come where they are.”That is disappointing for people with longstanding ties to smaller, more rural communities. “A lot of this has to do with mobility,” said Steven W. Rick, chief economist at CUNA Mutual Group, an insurance company. “People are going to have to move where the jobs are and not expect the jobs to come where they are.”
Although the Trump White House has had little time to make any substantial policy changes, anticipation of a rollback in taxes and regulations and the possibility of vast infrastructure spending has created optimism among employers and blue-collar workers. Although the Trump administration has had little time to make any substantial policy changes, the expectation of a reduction in taxes and regulations and the possibility of vast infrastructure spending have created optimism among employers and blue-collar workers.
Mr. Trump’s outsize promises of 4 percent economic growth and millions of new jobs face potential headwinds, though. Dissension among Republicans and the unpredictability of Mr. Trump’s course in several policy areas could dampen job growth. Mr. Trump has promised to expand the economy by 4 percent a year, create 25 million jobs in the next decade, revive manufacturing and reduce the trade deficit.
The future of the Affordable Care Act and a possible replacement is making hospitals and community health centers cautious about adding workers. And a strong dollar and a potential backlash against the White House’s travel ban could slow tourism and hiring in the sector. Mr. Trump’s across-the-board hiring freeze on federal government jobs, combined with declines at the state level, is likely to contain the number of public sector employees. Achieving all that would be difficult in the best of circumstances, let alone with the potential headwinds facing the White House. Dissension among Republicans and the unpredictability of Mr. Trump’s course in several policy areas could dampen job growth.
The future of the Affordable Care Act and a possible replacement is making hospitals and community health centers cautious about adding workers. A strong dollar and a potential backlash against the White House’s travel ban could slow tourism and hiring in the sector. And Mr. Trump’s across-the-board hiring freeze on federal government jobs, combined with declines at the state level, will probably reduce the total number of public sector employees.
The uncertainty extends to prospects for tax cuts. Some Wall Street analysts, expecting delays, have pared their growth forecasts for 2017, after recently raising them.The uncertainty extends to prospects for tax cuts. Some Wall Street analysts, expecting delays, have pared their growth forecasts for 2017, after recently raising them.
Certainly the snapshot of February’s jobs picture is good. The question is, if the economy does slow, whether Mr. Trump will accept the legitimacy of weak reports as enthusiastically as he does good ones. Certainly the snapshot of February’s labor market is good. The question is, if the economy does slow, whether Mr. Trump will accept the legitimacy of weak reports as enthusiastically as he does good ones.
Mr. Spicer suggested the president would. “Numbers are going to go up and down,” he said. “We recognize that.”Mr. Spicer suggested the president would. “Numbers are going to go up and down,” he said. “We recognize that.”