More Jobs is Bad News?

If you are confused by the title, you’re not alone. For January 2023, the US economy added over 500,000 jobs, beating the expectations of 188,000 by more than double. Unemployment fell to its lowest level in 54 years at 3.4%. Wait a second, I thought this was bad news, all of this sounds like great news so far.

Now for the bad news, US stocks fell immediately after the jobs report was released this past Friday because of the fear that the Federal Reserve will be forced to continue raising interest rates to combat inflation. Many were (foolishly) expecting that the Federal Reserve would start to cut rates towards the latter half of 2023 even after comments by Chairman Jerome Powell indicated otherwise. So, for now, the Federal Reserve continues to signal its intentions to bring inflation back down to 2% to maintain year-over-year price stability and employment. Many expect the Federal Reserve to continue raising rates for the foreseeable future with smaller hikes of 25 basis points.

For more information about how the rising rates may affect you or your business, please reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc., at (618) 997-3436.