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US Job Market Thriving Despite Fed Rate Hikes

by Madison Thomas
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In March, a lot of jobs were added in America and the unemployment rate went down. Over the past year, the Federal Reserve has increased interest rates many times to try to control inflation, but businesses are still doing great. The unemployment rate is 3.5%, not far from its 53-year low of 3.4%.

On Friday, the government published a report which suggests that it is getting less expensive to buy items. The wages people earn each hour increased only 4.2%, compared to 4.6% in February. This could signify that the Federal Reserve might stop raising rates soon.

Between February and March, hourly wages increased slightly by 0.3%, which is more than the 0.2% increase during January and February. But this figure shows that it isn’t as much as earlier months in 2022 had seen.

Last month also followed up with a lower job gain of 326,000 compared to what happened in February.

Daniel Zhao, an economist from Glassdoor said that the job market is cooling down a bit but still strong. This can be seen when 480,000 Americans looked for work in March. When there are more people searching for jobs, employers usually don’t have to offer higher wages which can help with keeping inflation low.

The number of people who either have a job or are looking for one is very high in March – it’s the highest it has been in three years! And the amount of working-age people (those between 25 and 54) who actually have jobs is also up, and it’s the most since 2001. In other words, lots of people are looking for work and finding it too.

The government said on Friday that it counted fewer jobs in January and February than it had earlier thought. This means the job market is getting weaker. It also means there won’t be as much pressure to raise prices, so the Federal Reserve thinks inflation will stay low. Sinem Buber, an economist from ZipRecruiter, also believes this should give the Federal Reserve more confidence.

Last month, the leisure and hospitality industry added the most jobs with an increase of 72,000. Specifically, restaurants and bars got 50,000 more positions. In addition, 39,000 job openings were created by state and local governments while 34,000 healthcare roles were available too. On the other hand, construction companies had to cut 9,000 jobs which was their first decline since 2022 January. Also, factories slightly reduced their workforce for the second month in a row because of a decrease in United States’ manufacturing production.

There are still more people of color without work than white people, but last month the unemployment rate for African Americans went down to the lowest point since 1972. There’s a lot of job openings out there too and loads of employers trying to get them filled!

In North Carolina’s Outer Banks, Clark Twiddy said that his family business has the tightest job market anyone has ever seen. His company helps people buy land and rent it to vacationers. To help attract more employees, they have changed their entry-level seasonal worker salaries from $13-$14 an hour in 2019 to $18-$20 an hour.

Service companies need to treat their employees as well as customers because the good workers have plenty of other job choices. It takes special people, not machines, to do certain jobs like cleaning bathrooms and kitchens so these companies must pay more, train more, and engage more with the staff.

Twiddy runs a business that’s doing really well because lots of people want to take holidays. He pays for 175 full-time staff and gives them special benefits like the chance to work from home or go on trips together to places like Nashville and Las Vegas. Even though it costs more money, he still makes tons more than ever before!

For over two years, many businesses have been dealing with labor shortages so they are now using machines to help make their process a lot faster and efficient. Walmart, which is the biggest retailer in the US, is starting to use automation in order to stay on top of the competition.

By 2026, Walmart said that two-thirds of its stores will have robots doing the work instead of people. The robots will use forklifts to take items off trailers, so workers can do jobs that require less physically demanding labor but pay more money.

Last month, a lot of jobs were created, so that’s good news. But recently, the economic numbers are showing that our economy is getting smaller which will help stop prices from going up too high. Manufacturing – meaning making goods and products – is not doing very well. Our country doesn’t have as much trade with other countries as before. And while businesses such as restaurants, stores and service companies are still growing, they’re expanding more slowly than before.

The most important job for the people at the Federal Reserve is to make sure prices don’t get out of control. That’s why they weren’t too worried when everything got more expensive in 2021, because they thought it was just a one-time thing due to how quickly the economy came back from the pandemic.

At the start of March 2022, the Fed made the decision to increase its benchmark rate (the amount spent to borrow money) from very low levels. In the past year, this rise has happened much more quickly than it did in 1980s; this was done to take control of some of the worst ever inflation rates we’ve seen since then.

Interest rates have become more expensive and as a result, inflation levels are falling – now at 6%. This is much lower than last June when it was 9.1%, however it’s still higher than what the Fed wants it to be which is 2%.

The Labor Department said on Thursday that it made a change to the way it counts how many people applied for unemployment benefits. After making this change, almost 100,000 more people than before had filed for unemployment. This might explain why lots of tech jobs were lost this year but weren’t seen on the list of unemployed people. The Fed hopes companies will post fewer job openings instead of laying off employees and reducing their wages.

The Fed was looking at the last report about jobs in March before its May 2-3 meeting. They will also get a better understanding of how expensive things are next week when the Labor Department releases their reports about what prices cost for consumers and businesses.

Some economists hope that even though the Fed is raising the amount that people have to borrow, the economy can still avoid a recession.

Zhao said that the job market is looking strong and should not go into recession. She suggested that it would not be a good idea to put money on against it. Another writer from New York named Anne D’Innocenzio also helped with this report.

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