U.S. job growth surged in April and the unemployment rate dropped to the lowest in nearly half a century, pointing to sustained strength in economic activity even as last year’s massive stimulus from Republican tax cuts and spending increases fades.
Lucia Mutikani of Reuters had the news:
The Labor Department’s closely watched monthly employment report on Friday showed the greater-than-expected 263,000 new jobs created last month were spread across most industry sectors, and the unemployment rate was just 3.6%, the lowest since December 1969.
Still, wage gains did not accelerate as expected, holding at a reading that is consistent with moderate inflation. Moreover, the decline in the unemployment rate was driven largely by the most people leaving the labor force in a year and a half.
The report was supportive of the Federal Reserve’s decision on Wednesday to keep interest rates unchanged and signal little desire to adjust monetary policy anytime soon. Fed Chairman Jerome Powell described the economy and job growth as “a bit stronger than we anticipated” and inflation “somewhat weaker.”
Christopher Rugaber of the Associated Press reported that the Trump administration took credit:
Trump administration officials insisted that the job market’s gains were a result of the president’s tax cuts and deregulatory policies.
“We have entered a very strong and durable prosperity cycle,” said Larry Kudlow, director of the White House’s National Economic Council.
President Donald Trump has also pressed the Federal Reserve to cut short-term interest rates because inflation remains low. But most economists said the healthy jobs picture, against the backdrop of low inflation, would reinforce the Fed’s current wait-and-see approach. The Fed raised rates four times last year but has signaled that it doesn’t foresee any rate increases this year.
Investors welcomed the April jobs data by sending stock prices broadly higher. The Dow Jones Industrial Average closed up 197 points, or 0.75%.
Nelson D. Schwartz of The New York Times reported that the economy is still not growing fast:
For all the signs that the economy is humming, the current expansion doesn’t resemble past booms. The scars of the Great Recession run deep, and even after 10 years of growth, the kind of euphoria that marked the technology sector in the late 1990s or the real estate market in the 2000s is conspicuously absent.
The pace of the current recovery has been weaker than during periods like the 1990s, which is among the reasons wage gains were so tepid until recently. It even prompted some economists to assert that a subdued economy was the new normal.
But the upside of slower growth during the last 10 years may be a longer, more durable expansion, said Michael Gapen, chief United States economist at Barclays. Consumers have been wary of borrowing to the hilt as they did before 2008, while businesses have been cautious about expanding too quickly.
