US jobs soar despite Fed’s high interest rates
A stunning US jobs report on Friday showed that the US economy added a whopping 517,000 jobs in January, far more than the expected 187,000 – taking unemployment down to 3.4%, the lowest it's beensince May 1969. This, coupled with the 11 million US employment openings at the end of 2022, reflects a hopping job market. Experts attribute the surprise figures to there being so much pent-up labor demand that companies continue to hire, though the tech sector has seen a recent slew of layoffs. Job creation has increased in areas like housing and finance, which would normally be more sensitive to high interest rates.
Sounds pretty great, right? Not exactly. The Federal Reserve has been desperately trying to slow the economy and tamp down inflation by raising interest rates, with eight hikes since March 2022. More jobs, however, mean more money being heaped into the economy, so markets tumbled Friday morning as investors anticipated more interest rate hikes in response. That said, the hiring surge may give economists a reason to soften their predictions about a looming recession, or at least about its severity.