Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
Today, we present the latest on the labor market, which to quote MC Hammer is "2 Legit 2 Quit." We also pay tribute to a legendary jazz musician, on what would have been his 100th birthday.
Employment Rose 311,000 in February
You know I’ve been writing too many of these columns when I’m quoting Hammer.
To quote a better song this time, "Big wheel keep on turnin’, Proud Mary keep on burnin’." Another month, another better-than-expected jobs report—you’d think we’d be used to this by now!
The 311,000 jobs added last month proved better than the 225,000 Dow Jones estimate. In the twelve months since the Fed started hiking rates, job growth has averaged 362,000 per month, an amazingly high figure. With all the talk about recession due to the slowdown in consumer spending, housing, and manufacturing, the labor market will have none of it. It just keeps going and going.
Here are more headlines from today’s report:
The unemployment rate ticked up from 3.4% to 3.6%, but that was due to an uptick in the labor force participation rate.
Hourly wages rose 4.6% from a year ago, less than the 4.8% estimate. But that’s actually good news, since it will help bring inflation down.
Leisure and hospitality added the most jobs last month (+105,000), but employment in that industry is still 2.4% lower than before the pandemic.
Job gains for January and December were revised down by a total of 34,000, but that’s no big deal.
We probably should have seen February’s blow-away jobs number coming, as consumer spending rose sharply in January, as did some other economic indicators. We also found out this week that the number of job openings in theU.S. was 10.8 million as of the end of January, or about 1.9 available jobs for each person looking for one.
As I’ve said before, despite a plethora of layoff announcements from big companies, businesses—mostly small businesses—are still in desperate need of workers. Another positive bit of labor news released yesterday was that while initial claims for unemployment rose last week, they remain historically low.
What does all this mean for the Fed and interest rates? Expect a 0.50% rate hike at the Fed’s next meeting in two weeks, unless something surprising shows up in the inflation reports next week. The fact that the labor market remains this strong after so many rate hikes really gives the Fed no other choice. That is, unless the consumer price index data shows inflation fell sharply last month, but I wouldn’t bet on that.
Happy 100th Birthday, Wes Montgomery!
March 6 would have been Wes Montgomery’s 100th birthday, so I’d like to spend a moment talking about this legend. Many of you have probably heard of him, and you may know he’s considered one of the best jazz guitarists ever. Wes was a self-taught guitar player who developed his own unique style of playing. This included only using his thumb and playing octaves, which gave him an incredible tone so many guitarists—including myself—have tried to copy. The more I’ve studied his work over the past few years, the more I’m amazed with his greatness.
But there was more to Wes than his massive talent. Wes’ youngest child Robert Montgomery tells his father’s story in a new documentary called "Wes Bound: The Genius of Wes Montgomery." You can find it at this link.
Unfortunately, Wes died at just 45 years old, but did leave us some of the best jazz ever released. I would strongly recommend "The Incredible Jazz Guitar of Wes Montgomery," which contains two of my favorites: "Four on Six" and "West Coast Blues."
Happy birthday Wes, and thanks for inspiring me and so many others.