Consumer Alert: Is a recession looming? What does the jobs report mean?
ROCHESTER, N.Y. – The jobs report came out on Friday, and we learned the unemployment rate is 3.5 percent.
We can’t pull out pompoms and party horns just yet, but several aspects of this report indicate we may not suffer a recession this year, instead, the economy may make a soft landing. One positive sign, the U.S. added 223,000 jobs last month. But you may be scratching your head right now thinking, wait a minute, isn’t the federal reserve raising interest rates to try to cool off this hot economy and lower inflation? How is this jobs report good news?
Ah, all is relative. The economy is still hot, but not as hot, let me explain.
in 2022 our economy was a speeding locomotive, threatening to come off the rails. Employers were hiring like crazy and increasing wages to try to attract workers. And, in turn, we as consumers were paying more because employers were raising prices to try to compensate for those higher wages.
For example, last February, the U.S. added a shocking 678,000 jobs. Compare that to 223,000 jobs in December. That’s a sign the economy is cooling but is still strong. For example, the healthcare, hospitality, and leisure industries added jobs that offset the layoffs in the tech sector.
The report shows that wages are still rising, they’re up 4.6 percent from a year ago. But the growth is slowing, which means the price we pay for goods and services should grow more slowly as well. And these are good signs.
Perhaps we won’t have the recession that so many feared. But we can’t get comfortable yet. A member of the fed’s board of governors said in a speech today that inflation is still far too high and is a great concern. That likely means the feds will continue to raise interest rates to cool the economy a bit more.