Steady jobs growth clears the way for interest rate hike
The U.S. economy added 235,000 jobs in February while the unemployment rate ticked down to 4.7 percent, according to a new jobs report released Friday. Adding to the good news, job revisions from January and December show that 9,000 more jobs were added to the economy than previously reported.
Economists were happy with the report, which also showed average hourly earnings rose by 6 cents in February, quickening the pace of wage growth from last month. Earnings are now up 2.8 percent over the year, finally approaching the 3 to 4 percent range to which economists would like to return.
“It’s unsurprisingly good,” Michael Madowitz of the Center for American Progress said. “We’ve had a pretty good job market for a few years now, and it seems like it’s on cruise control.”
“I think it’s a pretty positive jobs report,” said economist Aparna Mathur of the conservative American Enterprise Institute. “Labor force participation rates are up, employment is up, unemployment is down, and the U6 is going down.”
WILL THE FED RAISE INTEREST RATES?
The strong jobs report will likely push the Federal Reserve to raise interest rates when it meets next Wednesday.
“With the jobs report behind and barring the truly unforeseen, the Federal Reserve has a green light to raise interest rates by 25 basis points at the March meeting,” said Mark Hamrick, a senior economic analyst Bankrate.com.
Economist Justin Wolfers agreed.
Oh, and if you had any doubt about the March rate hike, these data dispel it. Interest rates are rising.
— Justin Wolfers (@JustinWolfers) March 10, 2017
The economy has added more than 200,000 a month for the past three months, Mathur said — which “should mean that they are ready to hike interest rates.”
WHO GETS TO TAKE THE CREDIT?
President Donald Trump appeared to take the credit for a strong job numbers, retweeting a blog post by the Drudge Report.
GREAT AGAIN: +235,000 https://t.co/GkockGNdtC
— DRUDGE REPORT (@DRUDGE_REPORT) March 10, 2017
Meanwhile, White House Press Secretary Sean Spicer tweeted “Not a bad way to start day 50 of this Administration.”
Not a bad way to start day 50 of this Administration https://t.co/pysL1jxLpq
— Sean Spicer (@PressSec) March 10, 2017
Trump has previously stated that he thinks the jobs reports are “90 percent” fiction. And at the White House briefing today, Spicer said “[the jobs reports] may have been phony in the past, but they’re very real now.”
Many economists took issue with not only the Trump administration claiming that the Bureau of Labor Statistics’ jobs reports might have been inaccurate in the past — “that is as absurd as it sounds,” Madowitz said — but also that the White House continued to take credit for the numbers reported by the BLS today.
“It’s obvious that they would like to take credit for the good jobs numbers now, but the jobs report and the work that the BLS does to produce it has always been authentic, completely above board and unbiased,” Mathur said in an email.
Experts simply cannot stand by while the White House attempts to undermine basic BLS institutions that measure the U.S. economy. https://t.co/JNsH9RTvix
— Andrew Chamberlain (@adchamberlain) March 10, 2017
Good jobs report. Pro tip: the first few months of job numbers reflect the previous president's policies, not the new guy
— Paul Krugman (@paulkrugman) March 10, 2017
Economist Betsey Stevenson pointed out that February’s jobs report is nothing new:
The labor market continues to be strong, with a historically long expansion in which wages are growing, unempt is low, & epop is rising.
— Betsey Stevenson (@BetseyStevenson) March 10, 2017
Mathur believes the economy, especially small business, is reacting positively to Trump’s presidency.
“The economy is reacting to the signals that Trump is sending, which are tax cuts and deregulations,” she said.
“Small businesses haven’t been adding a lot of jobs for the past few months, but over 100,000 jobs [were] added by small businesses [in February],” Mathur added, citing the ADP employment report.
NOT FEELING THE GOOD NEWS? HERE’S WHAT THE SOLMAN SCALE U7 SAYS
Not everyone feels like the good numbers from the jobs report reflect their economic situation. Some 5.6 million people are working part time who would like to work full time; another 5.6 million want a job but haven’t looked for one recently (often because they don’t believe any are available for them); and of course, some 7.5 million are unemployed.
Our Solman Scale U7 — which measures the officially unemployed, those who work part-time for economic reasons and anyone who wants a job no matter the last time they looked — dropped to 11.3 percent in February, down from 11. 6 percent in January. To put this in perspective, when we began calculating the U7 in August 2011, it was 18.3 percent.
Our economy has come a long way since then, but there are still many who are feeling the pain.
For example, the unemployment rate among African Americans — 8.1 percent — is still twice that of the white unemployment rate.
Madowitz is optimistic, however.
“Groups that see gains later in expansion are starting to see those gains now,” he said, noting that the black unemployment rate fell by about a percentage point over the year.
And the modest upswing in wage gains signals more to come, Mathur said.
“I expect wage gains to improve significantly over the year; it just seems like the labor market is tightening and that employers are talking about training workers and competing for workers,” she said.