The economy beat expectations in August and added 187,000 jobs, another sign that the labor market still has momentum despite the Federal Reserve’s interest rate hikes.
The headline job growth number in Friday’s employment report from the Bureau of Labor Statistics was more predicted, although the unemployment rate rose to 3.8%, still a historically low figure.
Additionally, it shows that the Fed’s months-long barrage of interest rate increases are still not hitting the broader economy as much as expected and could up the odds that the Fed hikes rates once again this year.
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The Fed has carried out a historic effort to tighten monetary policy in response to the inflation that has wracked households over the past few years. Annual inflation, as measured by the consumer price index, fell from more than 9% last June to just over 3% this June.
In the gauge favored by the Fed, the consumption expenditures index, prices rose at a 3.3% annual rate in July, according to a report personal released on Thursday.
Gross domestic product growth has remained surprisingly buoyant despite the rate hikes.
Economic growth increased at a 2.1% annual rate in the second quarter of this year, according to the government’s GDP estimates released this week. That follows a first quarter that featured a 2% growth.
Still, there are some side effects of the interest rate hikes that are hurting consumers. The higher interest rates have made credit cards more difficult to pay off and pushed housing affordability out of the reach of many families.
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As of Thursday, the average rate on a 30-year fixed-rate mortgage was sitting at just over 7%, according to Mortgage News Daily. That is a decline from the 7.42% notched last week, which marked the highest mortgage rates have gone since 2000.
The Biden administration has embarked on a political blitz promoting what it has dubbed “Bidenomics,” an effort to highlight all of the positive spots in the economy while tethering the president to the good news. The hope is that voters will be persuaded to reelect Biden in 2024 if they begin to see the economy in a better light, but that has not happened yet.