April 19, 2024

353,000 added to US economy Jobs rose surprisingly strongly in January, even as high interest rates continue to weigh on the economy.

Unemployment rate remains at 3.7 percent.

The job growth in January reinforces that despite some high-profile layoffs at technology and media companies, the labor market is propelling the economy and the economy remains firmly out of recession territory.

Strong consumer spending has allowed employers to hire at a much faster pace than has kept up with population growth and wages remain above inflation, increasing workers’ spending power.

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The picture of the US economy defying recession forecasts has also been boosted by stronger than expected GDP growth in the last quarter of 2023. A tight labor market and rising wages have allowed households to spend generously, fostering a resilient economy.

President Biden, heading into an election year, has received a political boost from strong jobs creation and unemployment below four percent in more than two years, despite much criticism about rising prices throughout the economy. Was seen in the 1960s.

Still, the labor market is in a delicate state, with the Federal Reserve announcing this week that it is not ready to start cutting interest rates without more certainty that inflation has been brought under control. Economists say if rates remain high for longer, hiring could slow more sharply and layoffs could increase, triggering a cycle of spending cuts and massive job losses as companies There is a decrease in revenue.

The number of Americans filing for unemployment benefits last week reached an 11-week high. Amazon, Microsoft, Google and many other tech companies said they will cut thousands of jobs this year, and retailers like Macy’s and REI have announced workforce cuts. UPS also announced nearly 12,000 layoffs this week, as the transportation and warehouse industry reverses some of the major expansion it experienced during its pandemic e-commerce boom. Layoffs more than doubled between December and January, from 34,817 to 82,307, according to employment firm Challenger, Gray & Christmas.

But some economists are not yet worried about concentrated layoffs in certain industries leading to an economy-wide recession. Layoffs are still running below their pre-pandemic levels, according to data released Tuesday by the Labor Department.

“In this low unemployment environment, most laid-off workers will be able to quickly find new jobs,” said Julia Pollack, chief economist at ZipRecruiter. “Although some individual employees may struggle to find comparable work, the overall layoff effect is unlikely to be significant.”

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The labor market has recently been buoyed by some fast-growing industries that are less responsive to higher interest rates: health care, government, and leisure and hospitality. Last year, the public sector, including education, finally reached its pre-pandemic employment levels after years of struggling with understaffing. This is due to stagnant wages and high rates of burnout. But more robust pay and benefits packages and streamlined hiring processes have recently made these jobs more attractive to workers.

Lindsey Rogers, 27, and her husband, Jared, a public school teacher in Baker City, Oregon, saw their household income double at the beginning of this school year thanks to a pay raise mandated in their new union contract. Due to increase approximately $48,000. Erin Lair, superintendent of the Baker School District, said in past years her school district in rural eastern Oregon has struggled to fill vacancies, but started this school year without a single vacancy because of a significant increase in teacher salaries. happened.

For the Rogers family, the pay increase means they can afford $750 a month of child care for their new baby.

“We sat in a union meeting on Zoom and they brought out our new pay scale and it was life-changing,” Rogers said. “I was in shock. We both had tears in our eyes. We were going to be able to provide a great life for our child. We were actually going to be paid like professionals.

Source: www.washingtonpost.com

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