Nonfarm payrolls increased 517,000 last month
after an upwardly revised 260,000 gain in December.
The unemployment rate dropped to 3.4%, the lowest since May 1969 and average hourly earnings grew at steady clip.
The figure beat all estimates in a Bloomberg survey of economists, which called for a 188,000 gain in payrolls and for the unemployment rate to rise to 3.6%.
Bloomberg 3 February 2023
What does it take to return inflation back to 2%?
As Mr. Powell emphasized, even if most of the rise in inflation was transitory, some of it wasn’t.
Mr. Powell said “sustainable” inflation would be more like 4%—a discouragingly high number.
So what then does it take to return inflation all the way back to 2%?
The markets seem convinced it will happen of its own accord, without a recession or higher unemployment.
Some Fed officials agree; narrower profit margins and softer spending “could facilitate continued easing in the labor market and reduction in inflation without a significant loss of employment,” Fed Vice Chair Lael Brainard recently said.
Mr. Powell disagrees, which seems to reflect the greater weight he, and the Fed’s staff, put on economic slack and the Phillips curveas the main determinant of where prices are headed.
Inflation, Mr. Powell said, won’t return to 2% “without a better balance in the labor market.”
Greg Ip 1 February 2023
https://www.wsj.com/articles/beneath-the-surface-fed-sees-no-letup-in-inflation-pressure-11675293510
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