Saturday, March 2, 2024

Biden hails robust jobs market as proof US economy is ‘strongest in the world’

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Joe Biden declared the strong jobs figures released on Friday as proof that “America’s economy is the strongest in the world”.

The US jobs market defied fears of a downturn again, when figures were released on growth in January, with employers adding 353,000 new jobs over the month, the labor department announced.

The jobs market has remained strong despite an aggressive series of interest rate rises by the Federal Reserve, aimed at cooling the economy and bringing down the rate of inflation. In January the unemployment rate was 3.7%, close to a 50-year low.

Economists had been predicting that the US would add less than 200,000 jobs over the month. The labor department also revised its job gains for December up from an initial estimate of 216,000 to 333,000.

The news was another boost to the US president, whose polling on the economy has remained weak despite the robust jobs market. Hiring was broad-based with gains in healthcare, government, professional and business services and retail.

Biden pointed out that the US has added almost 15m jobs since he was sworn in in January 2021.

In a statement from the White House, Biden said: “Today, we saw more proof, with another month of strong wage gains and employment gains of over 350,000 in January, continuing the strong growth from last year … It’s great news for working families that wages, wealth and jobs are higher now than before the pandemic, and I won’t stop fighting to lower costs and build an economy from the middle out and bottom up.”

He further said: “I’ll continue to stand in the way of efforts by congressional Republicans to enact massive tax giveaways for the wealthy and big corporations; cut Medicare, Medicaid and social security; and raise costs for American families.”

But there have been signs recently that the strong labor market is weakening. On Wednesday, ADP, the US’s largest payroll supplier, said private employers had added 107,000 new jobs in January, less than analysts expected and down from 158,000 in December.

Several large employers have also announced layoffs recently, including Citigroup, Deutsche Bank, PayPal and UPS.

The US added 2.7m jobs last year even as the Fed drove interest rates up to a 22-year high.

This week, Fed chair Jerome Powell said the US economy remained resilient and the rate of inflation – which has fallen from a high of just over 9% in June 2022 to 3.4% in December – was moving in the right direction.

But the Fed is still targeting an annual rate of inflation of 2%. Powell warned: “Inflation is still too high, the ongoing progress in bringing it down is not assured, and the path forward is uncertain.”

The latest jobs report will add pressure for the Fed to maintain its current interest rates. “The big picture for now is that markets are no longer convinced that the Fed will cut rates in May, let alone March,” Capital Economics said in a note.

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