Colegio de los Ángeles #8

Laura Carolina Hernández Betancurt Grammar 11° 15-01-2023

Jobs growth surges in US despite slowdown fears

Jobs growth surged in the US in January, defying fears that the economy is heading for a
downturn.
Employers added 517,000 jobs last month, the Labor Department said.
That was far more than expected, pushing the unemployment rate down to 3.4% - the lowest rate
since 1969.
Analysts are struggling to figure out what is happening in the world's largest economy, which is
being buffeted by a mix of higher borrowing costs and rising prices.
Many forecasters have warned that the odds of a recession this year are unusually high, pointing
to data which has indicated a recent pullback in consumer spending, declines in manufacturing
and a sharp slowdown in home sales.
A recent survey by research company Morning Consult suggested nearly half of the public thinks
the economy has already fallen into recession, or a period of decline.
Despite this, the labour market has remained strong - though the gains in January shocked even
those economists who have argued against the gloomy predictions.
"This is a breathtaking number," economist Justin Wolfers, a professor at the University of
Michigan, wrote on Twitter following the report.
The hiring in January was widespread, led by bars and restaurants, which are continuing to recover
from job losses sparked by the pandemic.
The car manufacturing and tech industries were among the few parts of the economy to report job
losses.
Those sectors are sensitive to borrowing costs, which shot up last year, as the US central bank took
steps to stabilise soaring consumer prices.
By raising interest rates, the Federal Reserve is aiming to cool demand, easing the pressures
pushing up prices.
However, the increase in rates, coming at a time when price increases have started to ease, has
raised fears that officials will tip the economy into a painful contraction, bringing economic activity
to an abrupt slowdown that leads to firms to cutting jobs.
The head of the Federal Reserve, Jerome Powell, said this week he was hopeful the US central
bank can avoid that scenario.
But he warned that the Fed was focused on curbing inflation and remained worried that the job
market was too strong to allow price growth to stabilise around the bank's 2% target.
Friday's report showed wages rose 4.4% over the 12 months to January.
Pay increases did not keep pace with price inflation last year and have shown signs of cooling in
recent months.
"It's difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as
strong as this and it's even more difficult to see the Fed stop raising rates and entertain ideas of
rate cuts when there is such explosive economic news coming in," said Seema Shah, chief global
strategist at Principal Asset Management.
Colegio de los Ángeles #8
Laura Carolina Hernández Betancurt Grammar 11° 15-01-2023

"The market is going to go through a rollercoaster ride as it tries to decide if this is good or bad
news. For now, though, looks like the US economy is doing absolutely fine."

MAIN IDEA

Jobs growth surged in the US in January, defying fears that the economy is heading for a
downturn. Analysts are struggling to figure out what is happening in the world's largest economy,
which is being buffeted by a mix of higher borrowing costs and rising prices. Many forecasters
have warned that the odds of a recession this year are unusually high, pointing to data which has
indicated a recent pullback in consumer spending, declines in manufacturing and a sharp
slowdown in home sales. A recent survey by research company Morning Consult suggested nearly
half of the public thinks the economy has already fallen into recession, or a period of decline.

POINT OF VIEW

I think the despite this, the labour market has remained strong though the gains in January
shocked even those economists who have argued against the gloomy predictions. The hiring in
January was widespread, led by bars and restaurants, which are continuing to recover from job
losses sparked by the pandemic. The car manufacturing and tech industries were among the few
parts of the economy to report job losses. The market is going to go through a rollercoaster ride as
it tries to decide if this is good or bad news.

It's difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as
strong as this and it's even more difficult to see the Fed stop raising rates and entertain ideas of
rate cuts when there is such explosive economic news coming in, chief global strategist at Principal
Asset Management.

For now, though, looks like the US economy is doing absolutely fine.