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Tuesday, December 06, 2022

Another solid month of US recruitment expected despite odds

Defying a pandemic and supply chain disruptions, the US economy has cranked out more than 400,000 jobs every month for nearly a year – a blazing victory in wildly uncertain times.

And despite rising inflation, the recruitment wave continued last month in the face of another setback: Russia’s war in Ukraine, which destabilized the economic outlook and drove gasoline prices to painful levels.

Economists surveyed by data firm FactSet expect the Labor Department’s jobs report for March to show employers added 478,000 jobs and the unemployment rate dropped from 3.8% to 3.7%. It would mark the lowest unemployment rate two years ago just before the pandemic, when unemployment hit a 50-year low of 3.5%.

The government will release the March jobs report on Friday at 8:30 am Eastern Time.

“With the war in Ukraine, increasing economic uncertainty and rising energy prices, we may see a slight slowdown in hiring in March,” said Daniel Zhao, senior economist at job website Glassdoor. “However, employer demand remains strong, which should maintain healthy levels of recruitment.”

The booming US job market reflects a strong rebound from the brief but devastating coronavirus recession, which wiped out 22 million jobs in March and April 2020 as businesses closed or hours cut and Americans stayed home to avoid infection. Stay on

But the recovery has been quick. Because of generous federal aid, savings accumulated during the pandemic, and ultra-low lending rates engineered by the Federal Reserve, American consumers have spent so fast that many factories, warehouses, shipping companies, and ports meet their customers’ demands. Failed to keep pace. Supply chains have shrunk, causing prices to rise.

As the pandemic eases, consumers are shifting their spending from goods to services, such as health care, travel and entertainment, that they long avoided during the worst of the pandemic. Result: Inflation is running at 40-year highThis creates difficulties for many low-income households who face rapid increases in necessities such as food, gasoline and rent.

It is not clear whether the economy can maintain the momentum of last year. Government relief checks are gone. The Fed raised its benchmark short-term interest rate Two weeks in advance and probably well into the next year will keep increasing it. Those rate hikes will result in more expensive loans for many consumers and businesses.

Inflation has also eroded consumers’ spending power: Hourly wages, adjusted for higher consumer prices, fell 2.6% in February from a year earlier. – 11th consecutive month in which inflation has overtaken year-on-year wage growth. According to AAA, average gasoline prices, $4.23 per gallon, are up 47% from a year ago.

Fed up with inflation, some consumers are reducing their spending. The Commerce Department reported on Thursday that consumer spending rose just 0.2% in February. — and fell 0.4% when adjusted for inflation — down from a 2.7% increase in January.

Nevertheless, the job market has continued to grow. Employers posted nearly a record 11.3 million positions in February. About 4.4 million Americans quit their jobs, a sign of confidence that they can find something better.

“We are still seeing a very tight labor market,” said Karen Fichuk, CEO of staffing company Randstad North America, who noted that there are now 1.7 job opportunities for every unemployed person in the United States.

Still, so many jobs were lost in 2020 that the economy still remains just shy of 2 million from the number it did just before the pandemic hit. In the past year, employers have added an average of 556,000 jobs in a month. At that pace – no guarantees to continue – the nation would have recovered all the jobs lost by the pandemic by June. (This will still not include any additional hiring that would have been made in the past two years under normal circumstances.)

Better job prospects are beginning to return to the labor force, which had remained on the sidelines because of health concerns, difficulty finding or delivering daycare, generous unemployment benefits that have now expired or other reasons.

In the past year, 3.6 million people have joined the US labor force, which means they now either have a job or are looking for one. But their rank is still nearly 600,000 less than where they stood in February 2020 just before the pandemic hit the economy.

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