April 4, 2022
April 4, 2022
The U.S. economy added more than 400,000 jobs in the final month of the first quarter, the Labor Department said Friday.
That means the economy has added at least 400,000 jobs for 11 straight months, something that has never happened in records going back to 1939. Applications for unemployment benefits have dropped to near their lowest point since 1969.
Leisure and hospitality, which includes hotels, restaurants and amusement parks, added a net 112,000 jobs in the third month of 2022. Within the industry, restaurants and bars added 61,000 jobs, hotels and other lodging businesses tacked on 25,000 and amusement, gambling and other recreation climbed 16,400.
The growth was slightly short of expectations, as consensus estimates from economists projected a gain of roughly 490,000 jobs in March and a decline in the jobless rate to 3.7 percent. However, the Labor Department also revised the January and February job gains up by a combined 95,000, bringing the total of jobs added by the U.S. economy in 2022 to 1,685,000 million.
Higher wage jobs showed growth. March was a mild month of job gains for the temporary help industry. Some factors explaining the softness may include falling numbers of healthcare temporary workers as the pandemic recedes and headwinds related to supply chain disruptions and the war in Ukraine.
Mark Zandi, chief economist at Moody’s Analytics, wrote on Twitter, “The March jobs report was right down the fairway – lots of jobs, lower unemployment, and higher labor force participation. The job market is rip-roaring. While not quite back to full-employment, the economy is close, and at the current pace of job growth will be there by summer.”
But given the low unemployment rate, the concern now is that the economy slow down. Zandi wrote that it “is somewhat disquieting in that the job market must cool off quickly, or inflation, our number one economic problem, will soon be a much bigger one.”
Uncertainty Continues to Loom
Last month’s employment report came at a time of increased uncertainty, following shortly after Russia’s invasion of Ukraine and in advance of the Federal Reserve’s first policy tightening moves. Equity markets have seen losses and increased volatility during this period, and credit conditions have tightened, especially mortgage markets. But the real economy continue to at least temporarily recover, and the jobs report reflects this.
New pandemic variants, supply chain disruptions, rising fuel prices, and a war in Europe may derail this recovery.
A tightening labor market with a lower-than-expected participation rate is pressuring U.S. employers and the economy. Speaking at the Griswold Center for Economic Policy Spring Symposium at Princeton last week, John C. Williams president and chief executive officer of the New York Fed, remarked:
"Part of the reason for a shortage of labor is that the U.S. labor force participation rate is still about a percentage point below its level prior to the pandemic, in what has become known as the Great Resignation. A portion of this decline reflects longer-term trends related to the aging of the population. But some left the labor market because they needed to be home to care for young children or elderly relatives. Others didn't want to risk exposure to COVID at the workplace. And many simply chose early retirement.
Despite the challenges presented by the Omicron wave early this year, the unemployment rate fell to 3.6 percent in March, bringing it in line with the very low levels seen before the pandemic. With low unemployment, solid wage growth, and ample job openings, all indicators show that the strength of the labor market is at a level consistent with my view of maximum employment."
“This is an economy and labor markets overheating, the Fed has to accelerate” its tightening, Jeffrey Rosenberg, senior portfolio manager for systematic multi-strategy at BlackRock Inc., said on Bloomberg Television.
Inflation may be starting to weaken consumer spending, the main driver of the economy. Americans increased their spending by just 0.2% in February, down from a much larger gain in January.
Inflation has also eroded consumers’ spending power: Hourly pay, adjusted for higher consumer prices, fell 2.6% in February from a year earlier — the 11th straight month in which inflation has outpaced year-over-year wage growth. According to AAA, average gasoline prices, at $4.23 a gallon, are up a dizzying 47% from a year ago.