MARCH 11, 2024 – 275,000 NEW JOBS ADDED IN FEBRUARY
The US economy added 275,000 jobs in February, while the unemployment rate rose to 3.9 percent, up from 3.7 percent in January. The numbers beat analysts’ expectations of 200,000 new jobs. The Labor Department’s report adjusted down the December new jobs to 290,000 (-43K) and January’s to 229,000 (-124K) from initial estimates. Unemployment of 3.9 percent is the highest it has been in two years, but remains at historically low levels.
The labor market continues to be healthy but isn’t growing at a pace to drive inflation. Subdued wage gains of 0.1 percent month over month; down from a 0.6 percent gain in January; is encouraging, despite the fact that wages are up 4.3 percent over 12-months.
Fed Chair Powell stated last week that interest rate cuts are not imminent as they await more assurance that inflation is truly trending back down to 2 percent. However, once they are confident inflation is holding the Fed will dial back rates to avoid tipping the economy into a recession. Powell agrees, that presently, “rates are well above neutral” and “are well into restrictive territory.”
When inflation gets close to the Fed’s target, and economic growth is steady, a federal funds rate of 2.5 to 3 percent will be appropriate. Rates currently stand at 5.25 to 5.5 percent.