MARCH 7, 2022 – HIRINGS SOAR AS UNEMPLOYMENT NEARS PRE-PANDEMIC LEVELS
The labor market is showing strong hiring and is nearing levels seen just before the pandemic took hold. Employers added 678,000 new jobs in February, the biggest gain in seven months, while the unemployment rate fell to 3.8 percent from 4 percent in January. This is edging closer to the 50-year low of 3.5 percent unemployment that was seen in early 2020. However, wage growth eased off, indicating the labor shortage may be finally easing. The Fed projected, in December, that long-run unemployment is expected to settle at 4 percent.
The wild card in this rosy economic outlook is the war in Ukraine which is driving up energy costs that could stall household spending and affect the labor market recovery.
The Fed is set to raise rates next week at their March 15-16 meeting by a quarter of a percentage point. With inflation running at 7.5 percent, the Fed plans to raise interest rates multiple times this year to prevent the economy from overheating. Their targets of full employment and 2 percent inflation, as the hurdles for raising rates, have well been met.