Let’s see if we’ve got this straight. Economists in air-conditioned university classrooms and Wall Street’s walnut-lined corner offices think the job market is “too hot” and higher unemployment and fewer job prospects for young workers and the underemployed are needed to cool inflation.
That’s sure what it sounded like on NPR when Scott Horsley reported, “The job market slowed last month, but it's still too hot to ease inflation fears.” Recent figures show the U.S. job market remains unusually hot, with an unemployment rate hovering near a half-century low.
CNN Business reported US employers added just 236,000 jobs in March, coming in below expectations and indicating that the labor market is cooling off amid the Federal Reserve’s yearlong rate-hiking campaign to chill inflation.
Economists were expecting a net gain of 239,000 jobs for the month and a jobless rate of 3.6%, according to Refinitiv. This is the first jobs report in 12 months that came in below expectations.
According to CNN Business, over the past 12 months, the labor market has seen a net gain of more than 4.1 million jobs, averaging 345,417 jobs gained per month, helping drop the unemployment rate to decades-low levels.
March’s total is a notable reduction from February’s upwardly revised 326,000 jobs gained and January’s monster jobs number — originally 517,000 but subsequently revised down to 472,000.
The 236,000 jobs added during March is the smallest monthly gain since a decline in December 2020. Excluding the losses seen during the first year of the pandemic, it’s the smallest monthly jobs gain since December 2019.
However, according to CNN Business, the job market remains above pre-pandemic norms: Between 2010 and 2019, the economy added an average of 183,000 jobs a month.
According to a report by Staffing Industry Analysis, employment expanded in most industry groups. The group with the largest gain was once again Leisure and hospitality, which added +72,000 jobs; followed by Health and social assistance, which added +50,800 jobs; and Professional services (excluding temporary help) which added +49,700 jobs. Employment declined in five sectors, with the most severe decline occurring in Retail trade, with a loss of -14,600. Employment also fell in Temporary help services, which fell by -10,700; Construction, which fell by -9,000; Financial activities, which fell by -1,000; and Manufacturing, which fell by -1,000.
But has the strong jobs market translated into wage growth for America’s workers?
Hope King and Courtenay Brown, writing for Axios, reported real average hourly earnings rose 0.2% from February to March. From January to February, wages decreased 0.1%. Compared to March 2022, real average hourly earnings are still down — by 0.7%. But that's an improvement from the 1.3% dip from February 2022 to February 2023.
With inflation at 6 percent from February 2022 to February 2023, looking at the Axios chart it appears the only sector to beat inflation was leisure and hospitality, with a 6.07 percent increase – every other sector from utilities, to construction, to professional and business services, to retail trade, to manufacturing and transportation and warehousing lost ground.
And yesterday the Federal Reserve announced another quarter-point rate “inflation fighting” rate increase, bringing the benchmark interest rate to a range of 5 percent to 5.25 percent. The UK’s Daily Mail reported the Fed's statement offered little indication that its string of rate hikes have made significant progress toward its goal of cooling the economy, the job market and inflation.
“Job gains have been robust in recent months, and the unemployment rate has remained low,” the statement said. “Inflation remains elevated.”
The Fed's rate increases over the past 14 months have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession. Home sales, and home construction industry employment, have plunged as a result.
The Fed's latest move will further increase certain borrowing costs for families and businesses at the same time it causes a contraction in blue collar industries, such as home construction.
Once again, we see the Joe Biden administration and the Federal Reserve acting as both the arsonist and the fireman – printing money to fund a federal deficit that fuels inflation, driving up interest rates, killing jobs and then raising borrowing costs for those least able to afford to borrow.
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