America’s employers extended robust hiring for March 2022, after adding 431,000 jobs in a sign of the economy’s resilience in the face of a still-destructive pandemic and the highest inflation in 40 years.
The Labour Department’s report on Friday, April 1, 2022, showed that last month’s (March) job growth helped reduce the unemployment rate to 3.6%, being the lowest level since the pandemic erupted two years (2020) ago.
Despite the inflation surge, persistent supply bottlenecks, the damaging effects of COVID-19 and now a war in Europe, employers managed to add at least 400,000 jobs for 11 straight months. Inflation might have weakened consumer spending, which is the main driver of the economy. Americans increased their spending by just 0.2% in February 2022, down from a much larger gain in January 2022.
The breakdown
Still, the job market keeps racing ahead. Employers posted a near-record of 11.3 million positions in February 2022. In addition, nearly 4.4 million Americans quit their jobs, on the confidence pedestal sign that they could find something better. The report further revealed that, the job market continued to rebound with unexpected speed from the coronavirus recession. Job openings are at a near-record level, and applications for unemployment benefits have dropped to near their lowest point since 1969.
Although the still-solid US job market reflected a robust rebound from the brief, devastating coronavirus recession wiped out 22 million jobs in March and April 2020 as businesses shut down or cut working hours, and with Americans’ stay-home policy to avoid infection. However, the recovery has been swift.
Even so, many jobs were lost in 2020 and the economy still remained more than 2 million shy of the number it had just before the pandemic struck. Over the past year, employers added an average of 556,000 jobs a month. At that pace, it is hoped that the nation would recover all the jobs lost as a result of the pandemic by June 2022.
A switch from goods to services
Fueled by generous federal aid, savings amassed during the pandemic and ultra-low borrowing rates engineered by the Federal Reserve, US consumers have spent so fast that many factories, warehouses, shipping companies and ports failed to keep pace with their customer demand. Supply chains also snarled, forcing up prices.
As there is an easing on the pandemic, consumers have broadened their spending beyond goods to services. Services such as healthcare, travel and entertainment, which they long avoided during the worst days of the pandemic.
The result of the high inflation is causing hardships for many lower-income households that face sharp price increases for such necessities as food, gasoline and rent. It’s unclear whether the economy can maintain its momentum of the past year. The government relief cheques are gone. The Federal Reserve raised its benchmark short-term interest rate two weeks ago and will likely keep raising it well into next year. Those rate hikes are likely to result in more expensive loans for many consumers and businesses.
On the part of inflation
Inflation has also weather-beaten consumers’ spending power. Hourly pay, adjusted for higher consumer prices, fell 2.6% in February 2022, from a year earlier, which is the 11th straight month in which inflation has outpaced year-over-year wage growth.
According to AAA, average gasoline prices, selling at $4.23 a gallon, are up by 47% from a year ago. This means that gasoline prices moved up by $1.99. Squeezed by inflation, some consumers are compelled to pair their spending. The Commerce Department reported on Thursday, March 31, 2022, that consumer spending rose just 0.2%% in February 2022, and fell 0.4% when it was adjusted for inflation, down from a 2.7% increase in January 2022.
Brighter job prospects are beginning to draw back into the labour force Over the past year, 3.6 million people have joined the US Labor Force, meaning they now either have a job or are looking for one. But their ranks are still nearly 600,000 short of where they stood in February 2020, just before the coronavirus pandemic crashed the economy.
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