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The March jobs report out this morning revealed that the U.S. labor market remains in a strong position. RSM Chief Economist Joe Brusuelas and John Hancock Investment Management Co-Chief Investment Strategist Emily Roland joined Brad Smith and Seana Smith on Yahoo Finance Live to break down what the numbers mean for the overall economic outlook. According to Brusuelas the “primary takeaway” from today’s data: the Fed will hike rates by 25 basis points at their May meeting. He said the job market is “strong albeit cooling,” calling the 3.5% unemployment rate “pretty much status quo.” But the market is still hungry for workers, with a shortage, particularly in the service industry. Overall he says the still-tight labor market tells us “inflation is cooling but not fast enough.” Roland calls the U.S. labor market “undoubtedly the strongest pillar” of the economy. She says that what is notable in this report is that non-farm payrolls beat expectations for the 12th straight month. Roland pointed to the bond market, which repriced expectations for the Fed’s May move. Prior to the jobs report, the rate hike expectation was 50-50, however, after this report, the bond market indicates that “25 basis points is now the base case.” Key Video Moments: 00:00:08 – Brusuelas “the Fed will hike rates” 00:01:00 – “Inflation is cooling but not fast enough” 00:01:15 – Labor market “strongest pillar” of U.S. economy 00:01:53 – “The Fed has some work” ahead of them To watch the full breakdown of the March jobs report with Joe Brusuelas and Emily Roland, click here.
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The March jobs report, released earlier this week, revealed some interesting trends in the US labor market. While the overall numbers were encouraging, indicating a continued recovery from the effects of the pandemic, there is one key aspect that caught the attention of economists – inflation. According to experts, the report shows that inflation is cooling, but not at a pace that is satisfying.

The report revealed that the US economy added an impressive 916,000 jobs in March, which was significantly higher than the previous month’s figures. This robust growth suggests that the country is on track for a strong rebound. Moreover, the unemployment rate dropped to 6%, down from 6.2% in February, signaling that more people are reentering the workforce.

However, behind these encouraging numbers lies an issue that economists have been closely monitoring – inflation. Inflation refers to the increase in prices for goods and services over time, eroding the purchasing power of money. It is a concern because if it rises too rapidly, it can harm economic stability and hurt consumers’ pockets.

The jobs report indicated that wage growth remained modest in March, implying that the labor market is not yet putting significant upward pressure on prices. Average hourly earnings increased by only 4 cents, falling slightly below economists’ expectations. This suggests that employers are not being forced to raise wages significantly to attract workers, meaning that the labor market may not be as tight as anticipated.

However, even though wage growth remains moderate, the jobs report did show signs of increasing inflationary pressures elsewhere. For instance, the report revealed that leisure and hospitality businesses, which have been hit hardest by the pandemic, added 280,000 jobs in March. As these industries reopen and demand surges, prices for services could rise. Similarly, the construction sector added 110,000 jobs, potentially leading to increased costs in an already hot housing market.

These inflation concerns are not new. Economists have been worried that the ongoing stimulus measures, such as the $1.9 trillion relief package passed by the Biden administration, coupled with pent-up consumer demand, could fuel price increases. The massive injection of liquidity into the economy could push inflation beyond the Federal Reserve’s comfort level of 2%.

Federal Reserve Chairman Jerome Powell acknowledged these concerns during a recent press conference, highlighting that temporary increases in inflation might be expected due to unique re-opening effects. However, he reiterated that the central bank aims to maintain long-term price stability.

To counter this potential inflationary pressure, the Federal Reserve has been clear about its intention to maintain interest rates at near-zero levels until substantial progress is made on employment and inflation. Powell has consistently indicated that the central bank does not intend to raise rates preemptively to combat inflation concerns. Instead, they will take a patient approach and assess the data as the recovery unfolds.

The March jobs report provides evidence that supports the Federal Reserve’s stance on the current inflation situation. While some sectors are experiencing growth, wage pressures remain moderate, suggesting that inflation is not spiraling out of control. However, the concern is that as the economy continues to reopen and recover from the pandemic, inflationary pressures could intensify.

The challenge for policymakers and economists is to strike a delicate balance. It is crucial to support the recovery and ensure that robust job growth continues while monitoring inflation closely. The Federal Reserve’s commitment to maintaining accommodative monetary policy until maximum employment is achieved demonstrates their determination to navigate this challenging path.

In conclusion, the March jobs report offered encouraging signs of a robust recovery in the US labor market. However, economists remain wary of inflationary pressures that could potentially disrupt the economy. While inflation is cooling, it is not cooling fast enough to alleviate concerns entirely. As the recovery progresses, policymakers must stay vigilant to strike the right balance between supporting growth and maintaining price stability.

Economist states March jobs report indicates that inflation is slowing down, although not at a satisfactory pace appeared first on Inflation Protection.