US adds 236,000 jobs in March, unemployment rate drops to 3.5%: live updates

Policymakers are watching carefully how banks, investors and other lenders react to the turmoil. If they decline sharply and access to credit becomes more difficult and expensive, it could slow consumer spending and business expansions. The Fed has been raising rates since last March to rein in a hot economy, but the banking fallout could do some of the Fed’s work for it. If the reaction is strong enough, it could increase the chances of a bad recession.

Federal Reserve officials raised interest rates at the March 22nd meeting and predicted they may raise them again this year. But Jerome H. Powell, Chairman of the Federal Reserve, underlined That the central bank could do more or less depending on the severity of the fallout. For now, officials are waiting to see what happens.

“While this rearview mirror shot points to a soft landing for the US economy, the downward path ahead is narrow and short,” Gregory Daco, chief economist at consulting firm EY-Parthenon, wrote in a note after the jobs report was released. …and he said he believed the report would keep the Fed “on track” to increase the interest rate by another quarter point before it stops adjusting policy.

The Fed will announce Next rate decision on May 3.

While the Fed will have to monitor lending conditions as well as economic data, Friday’s numbers may give officials a little more confidence that the labor market is heading in the direction they’ve been hoping.

Average time Earnings growth It eased to 4.2 percent in the year through March, down from 4.6 percent in the previous month and the slowest pace since June 2021. While this remains an unusually fast pace of growth, the pace of wage gains is slowing – good news for the Fed policy makers.

While central bankers usually embrace aggressive wage increases, wages have been rising so quickly that many people worry that it will make it difficult to fully slow inflation. When employers pay more, they are likely to try to charge more to cover escalating labor costs. And when households earn more, they may be able to absorb price increases without cutting back on spending.

“Wage growth is slowing, job gains are moderating — that’s what the Fed is looking for,” said Julia Coronado, founder of MacroPolicy Perspectives. “We have a better balance between supply and demand.”

And while employers are still hiring at a rapid rate compared to pre-pandemic standards, this is happening as workers return to the job market. This increases the labor supply, which may help alleviate the shortage of workers.

Ms. Coronado noted that there is likely to be more calm in the labor market — construction hiring has just begun — and said she thinks the Fed may stop raising interest rates in May if officials want to.

The Fed “will probably go, but they don’t have to, based on this report,” she said.