RALEIGH, N.C. (WNCN) — Surprising news for the economy came Friday as the number of people who gained employment unexpectedly surged.
However, this may be a case where good news is not necessarily good news.
Here’s what that means: More people are getting jobs, but the drop in unemployment may cause the feds to raise interest rates.
The employment numbers indicate the US economy has now regained all the jobs lost during the pandemic.
It took 2.5 years, but now the unemployment rate has returned to where it was before COVID-19 hit.
“This was a humdinger of a report,” said Dr. Gerald Cohen, the chief economist at UNC’s Keenan Institute of Private Enterprise.
“There was strength everywhere — very broad-based strength,” Cohen said.
Officials said 528,000 jobs were added across all aspects of the economy, with the leisure and hospitality industries leading those gains.
Those numbers are double what was anticipated. Economists expected only about 250,000 jobs to be added. The bigger number indicates the economy is in great shape.
“With a job market this strong, we can’t call it a recession,” said Dr. Michael Walden, an economist at N.C. State University.
However, a recession isn’t out of the picture because economists believe the Federal Reserve will continue to try and slow inflation by making money tougher to borrow.
“I think it will cause the Federal Reserve to stick with its plan to raise interest rates,” said Walden. “I believe higher interest rates are on the way.”
“That’s painful for businesses that need to borrow money and for households,” said Cohen. “That means the probability of a recession increases.”
What does all this mean to those of us going about our everyday lives?
“Eventually … we will see the job market slow down,” said Walden. “I don’t mean job declines but simply gains will be smaller.”
CBS 17 Consumer Investigator Steve Sbraccia asked Cohen what do employers have to do to attract more people?
“They need to increase wages and that’s a benefit if you’re an employee or looking for a job,” he said.
Over the past year, wages have increased about 5.5 percent — but that’s way slower than the rate of inflation. That means despite the salary increases, people are still struggling to get by.
Here’s one other interesting factoid about unemployment.
During the recession, retirement rates surged.
Now, economists are predicting a significant number of those who retired will return to the workforce in the coming year.
If that happens, it will drop unemployment numbers even more.