The Labor Department will issue the February jobs report at 8:30 a.m. Eastern time Friday.
A new batch of healthy jobs data would mirror other recent reports that have shown an economy picking up as new COVID infections have plummeted since late January. Consumer spending jumped in January, spurred by higher wages and increased savings. Restaurant traffic has reached pre-pandemic levels, hotel reservations have risen and far more Americans are flying than at the height of omicron.
Still, inflation has reached its highest level since 1982, squeezing the nation’s households and businesses, with price spikes especially high for such necessities as food, gasoline and rent. If Friday’s jobs report shows another strong month for hiring, lower unemployment and sharply higher pay, it could intensify pressure on the Federal Reserve to raise interest rates to cool growth.
Chair Jerome Powell said Wednesday that he plans to propose that the Fed raise its benchmark short-term rate by a quarter-point when it meets in about two weeks. The central bank’s key rate is now pegged near zero.
Powell has acknowledged that high inflation has proved more persistent and has spread more broadly than he and many economists had expected. He said the Fed would likely engage in “a series” of rate hikes this year to try to tame inflation. Those increases will eventually mean higher rates for consumers and businesses, including for homes, auto loans and credit cards.
The Fed chair cautioned that if inflation failed to ease later this year as he expects, he would consider carrying out half-point increases at future central bank meetings. Larger hikes would raise the risk of weakening the economy or even plunging it into recession.
For now, though, the rapid fading of the omicron variant is likely to accelerate the economy and hiring. In January, millions of Americans missed work because of illness or because they were caring for those who were sick. The drop in COVID cases might have led some of these people to return to work in February.
Data from the restaurant reservation software provider OpenTable showed that seated diners surpassed pre-pandemic levels late last month. And figures from the Transportation Security Administration reflected a sharp increase in the number of people willing to take airplane flights.
During the omicron wave, businesses barely wavered in their demand for workers. Job openings at the end of December reached near-record levels, with an average of 1.7 available positions for every unemployed person. Historically, there are usually more people out of work than there are jobs.
Americans’ concerns about inflation have eroded their optimism about the economy. The Conference Board’s measure of consumer confidence slipped in February for a second straight month.
Still, other surveys show that Americans are increasingly satisfied with their own financial situations. And people clearly see that many jobs are available, the Conference Board’s survey shows.