President Joe Biden issued a statement Friday celebrating the latest blowout jobs report. They showed “another month of strong wage gains and employment gains of over 350,000 in January, continuing the strong growth from last year,” it read. This was, the statement added, “proof” that “America’s economy is the strongest in the world.”
But below the surface these latest jobs figures may yet prove unhelpful to the president’s re-election campaign. That’s because they pose not one but two possible risks that could prove a headache in the months leading up to November: the risk of more inflation, but also the risk of a recession. The nonfarm-payrolls numbers in January were double what economists had been expecting. So, too, was the rise in hourly earnings. These figures are good for workers and for job hunters. But they raise the concerns that Federal Reserve chair Jay Powell’s economic medicine is not yet working the way it’s supposed to, and that the economy is not cooling off. “Wages came in hot at 0.6%, which is the highest release since March 2022,” writes Jeff Schulze, head of economic and market strategy at ClearBridge Investments, in a note to clients. “This reading, coupled with the overall jobs number, effectively takes a March rate cut off the table and should raise fresh concerns about the potential for a reacceleration of inflation.” Context: Wage spike in January probably not an inflation warning sign. Here’s why. Also see: March rate cut? Even May now seems remote. You can see this very clearly in the markets’ reaction to the data. The futures markets, which bets on future interest rates, just slashed bets yet again on early interest-rate cuts. It is also cutting its estimate for rat …
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But below the surface these latest jobs figures may yet prove unhelpful to the president’s re-election campaign. That’s because they pose not one but two possible risks that could prove a headache in the months leading up to November: the risk of more inflation, but also the risk of a recession. The nonfarm-payrolls numbers in January were double what economists had been expecting. So, too, was the rise in hourly earnings. These figures are good for workers and for job hunters. But they raise the concerns that Federal Reserve chair Jay Powell’s economic medicine is not yet working the way it’s supposed to, and that the economy is not cooling off. “Wages came in hot at 0.6%, which is the highest release since March 2022,” writes Jeff Schulze, head of economic and market strategy at ClearBridge Investments, in a note to clients. “This reading, coupled with the overall jobs number, effectively takes a March rate cut off the table and should raise fresh concerns about the potential for a reacceleration of inflation.” Context: Wage spike in January probably not an inflation warning sign. Here’s why. Also see: March rate cut? Even May now seems remote. You can see this very clearly in the markets’ reaction to the data. The futures markets, which bets on future interest rates, just slashed bets yet again on early interest-rate cuts. It is also cutting its estimate for rat …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]