The U.S. economy created 517,000 jobs in January. The surprisingly strong number could stiffen the Fed's determination to squeeze the economy to fight 40-year-high inflation.
Fed Chair Jerome Powell and the Fed on Wednesday again raised rates by a quarter of a percent, the eighth straight increase. | Alex Wong/Getty ImagesThe U.S. economy created 517,000 jobs in January, a surprisingly strong number that underscores the remarkable resilience of the labor market but could stiffen the Federal Reserve’s determination to squeeze the economy to fight 40-year-high inflation.
President Joe Biden and the White House can celebrate the report as evidence the economy is continuing to hum along, and it will blunt attacks from Republicans over the administration’s spending policies. But senior officials in the West Wing were privately hoping for a less-robust number. So was Fed Chair Jerome Powell.— The White House can view the report as evidence that economists’ predictions of an imminent recession are off-base.
He’s strongly committed to bringing inflation to the central bank’s target range of 2 percent. Since the Consumer Price Index peaked last June at 9.1 percent, inflation has steadily fallen, hitting a still-high 6.5 percent in December. “My base case is that the economy can return to 2 percent inflation without a really significant downturn or a really big increase in unemployment,” Powell said Wednesday. “I think that’s a possible outcome. I think many, many forecasters would say it’s not the most likely outcome, but I would say there’s a chance of it.”
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