A stream of 300,000 monthly gains in new jobs is normally a sign of a hot labor market and perhaps higher inflation. Yet Wall Street is finding comfort in evidence of slowing wage growth as a potential escape valve for the economy. The U.S. added a larger-than-expected 311,000 new jobs in February, the government reported Friday. That puts the average increase over the last six months at 336,000.
How strong is that? The last time the U.S. created so many jobs in a six-month stretch before the pandemic was 29 years ago in 1994. The big increase in hiring last month, combined with a supersized 504,000 gain in January, suggests the Federal Reserve might resort to another large half percentage point increase in its policy interest rate. The Fed is worried a historically tight labor market will keep upward pressure on wages and make it harder to get high inflation under control. Higher interest rates reduce inflation by weakening the economy — and also raise the risks of recession. Indeed, Fed Chairman Jerome Powell seemed to indicate another large hike might be in the offing in congressional testimony this week. Fed officials meet March 21-22 to plot their next move. The comments of Powell and other senior Fed officials marked a big change in what they were signaling just a month or two ago, when they virtually swore off further big hikes. They indicated they would prefer to move in smaller one-quarter point increments. Now investors and economists think a smaller rate hike is back on the table after the softest increase in wages in a year. Hourly pay …