(WASHINGTON) — A blockbuster jobs report on Friday delivered the latest sign of strong U.S. economic performance, defying the lukewarm feelings held by many Americans, some experts told ABC News.
Employers hired 303,000 workers last month, blowing past economist expectations of 214,000 jobs added, U.S. Bureau of Labor Statistics data showed. The unemployment rate held steady at 3.8%, hovering near a 50-year low.
The hiring far surpassed the average number of jobs added each month over the previous year, suggesting an acceleration in performance for one of the key metrics used to assess the nation’s economic health.
“This morning’s blowout jobs numbers show that the economy isn’t showing any signs of slowing down,” Chris Zaccarelli, chief investment officer for North Carolina-based Independent Advisor Alliance, told ABC News in a statement.
However, the strong job gains coincided with a slight dip in consumer sentiment last month, according to a University of Michigan survey. Attitudes about the economy improved in previous months but remain well below pre-pandemic levels, the survey showed.
The uneasy feelings about the economy have weighed down President Joe Biden’s approval ratings on his leadership on the issue. Only 37% of Americans approve of his handling of the economy, a Gallup poll last month showed.
Despite a booming job market and robust economic growth, the economy remains saddled with higher-than-normal inflation.
Inflation has fallen significantly from a peak of 9.1% but it remains more than a percentage point higher than the Fed’s target rate of 2%.
The gap between economic performance and consumer attitudes stems from residual frustration about the months-long bout of high inflation as well as bias tied to political partisanship, Mark Zandi, chief economist at Moody’s Analytics, told ABC News.
“Many Americans remain unconvinced about the economy’s strength, but this reflects in part the previously high inflation and that many are paying much more for food, rent, and other living costs,” Zandi said. “It also reflects the nation’s fractured politics, as many are looking through their political prism when making assessments about the economy’s performance.”
Biden touted the jobs data in a statement on Friday, celebrating 15 million jobs created since he took office.
“That’s 15 million more people who have the dignity and respect that comes with a paycheck,” Biden said. “We’ve come a long way, but I won’t stop fighting for hardworking families.”
The blockbuster jobs data arrives during a sustained period of high borrowing costs, which typically weigh on economic activity and company hiring. In theory, the high interest rates depress consumer demand and lower inflation.
At a meeting last month, the Fed opted to keep rates highly elevated. The Fed Funds rate remains between 5.25% and 5.5%, matching its highest level since 2001.
The Fed, however, said last month that it still intends to make three interest rate cuts this year. The next opportunity for a rate decision will take place at a central bank meeting next month.
Economists differed about the implications of the jobs report for the timing of a potential rate cut.
Some experts suggested that the show of economic strength would prompt the Fed to delay a rate cut, since such a move could trigger a burst of demand and a rebound of inflation.
While others said a cooling-off of wage increases detailed in the report would nudge the Fed toward a rate cut, because the pay slowdown eases the risk of price hikes made in an effort to offset rising labor costs.
“Continued hot job growth will reinforce the Fed’s cautious approach towards rate cuts as some Fed officials will likely see job growth as still too hot for comfort,” Lydia Boussour, senior economist at consulting firm EY, told ABC News in a statement.
But economists who spoke to ABC News agreed that the jobs report offered evidence of a U.S. economy in good health.
The three major stock indexes, meanwhile, inched upward in early trading on Friday.
“A strong labor report is a good thing for the economy, even if it delays the Fed’s rate cuts,” Bret Kenwell, a U.S. investment analyst at eToro, told ABC News in a statement.
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