By PAUL WISEMAN (AP Economics Writer)
WASHINGTON (AP) — Employers in the United States continued to hire a lot in February, adding an unexpected 275,000 jobs. This once again demonstrated the strength of the U.S. economy, even with high interest rates.
Job growth last month increased from 229,000 jobs in January. The unemployment rate went up to 3.9%, but it has stayed below 4% for the 25th consecutive month.
The government report on Friday showed that the job market has been able to handle the 11 rate hikes by the Federal Reserve to combat inflation, which made borrowing more expensive. Employers have kept hiring to meet the steady demand from consumers.
Despite lower inflation, a strong job market, and a record-high stock market, many Americans are unhappy with the economy. This sentiment is likely to affect President Joe Biden's re-election bid, as many voters blame him for the rise in consumer prices since 2021. Although inflation pressures have eased significantly, average prices are still about 17% higher than three years ago.
When the Fed started aggressively raising rates in March 2022 to combat the worst inflation in four decades, a painful recession was widely predicted, with layoffs and high unemployment. The Fed increased its benchmark rate to the highest level in over two decades.
In response, inflation has steadily eased: Consumer prices in January were only 3.1% higher than a year earlier, down from a peak of 9.1% in 2022 and approaching the Fed's 2% target.
Many Americans are showing confidence in the economy through their actions: Consumers, whose wages have outpaced inflation over the past year and who saved money during the pandemic, have continued to spend and drive economic growth. The country's gross domestic product, the total output of goods and services, grew by a strong 2.5% last year, up from 1.9% in 2022, and employers keep hiring.
Immigration has helped boost the job market since the end of pandemic-related travel bans. Last year, foreign-born individuals made up 62% of the 2.4 million people who either got a job or started looking for one. The economy's growth depends on a steady flow of job seekers.
Meanwhile, the job market's slight slowdown is happening by companies posting slightly fewer job openings rather than laying off workers. The number of Americans applying for weekly unemployment benefits has stayed low, suggesting that most workers have job security.
Wage growth is still somewhat high from the perspective of the Fed because it can contribute to inflation pressures. Some economists argue, however, that pay increases don't need to decrease by much: A surge in productivity last year, as companies invested in machines and used their workers more effectively, means that employers can pay more and still make profits without raising prices.
