Economists are scratching their heads and wondering why the Fed’s aggressive interest rate hikes haven’t slowed hiring at a time when many foresee a recession nearing.
Consider what happened in January: The government said Friday that employers added a sizzling 517,000 jobs last month and that the unemployment rate dipped to 3.4%, the lowest level since 1969.
On top of the sizzling job growth it reported for January, the government on Friday also revised up its estimate of the gains in November and December by a combined 71,000. The Fed has raised its key rate eight times since March to try to slow the job market and contain inflation, which hit a 40-year high last year but has slowed since then.
But year-over-year measures of consumer inflation have steadily eased since peaking at 9.1% in June. At 6.5% in December, though, inflation remains far above the Fed’s 2% target, which is why the central bank’s policymakers have reiterated their intent to keep raising borrowing rates for at least a few more months.
The Fed is aiming to achieve a “soft landing” — a pullback in the economy that is just enough to tame high inflation without triggering a recession. The policymakers hope that employers can slow wage increases and inflationary pressures by reducing job openings but not necessarily by laying off many employees.
Centura Health, a nonprofit that runs hospitals and clinics in Colorado and Kansas, has offered $15,000 “retention” bonuses to retain nurses, respiratory therapists and others for 24 months; 2,500 have accepted the offer. And for employees who perform routine but vital tasks like changing sheets and delivering meals to patients, Centura has raised entry-level hourly pay as high as $18.
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