The last figures released last week confirm the statement by Federal Reserve Chairman Jerome Powell that the US labor market is “extremely tight.” The creation in March of 431,000 new non-agricultural jobs, brought down the unemployment rate to 3.6 percent, from 3.8 percent in February, very close to the pre-pandemic level of 3.5 percent of February 2020. The last figure also is the 11th consecutive month of job creation above 400,000, the longest period since 1939. With the decline of contagion from the Omicron variant of the COVID19 virus, the leisure and hospitality sector made the biggest contribution to job creation in March, followed by professional services and retail trade. Wages also increased in March, with average hourly earnings increasing 5.6 percent from a year earlier, but still behind inflation, as measured by the consumer price index, of almost 8 percent.
To bring inflation under control, the central bank already started increasing interest rates and has said that, if necessary, it will continue doing so throughout this year. The main question is if defeating inflation can be accomplished without hurting the vigorous labor market. Experts call this a “soft landing,” instead of the recession required to bring down inflation in the 80s, known as a “hard landing.”
