Employers Added 172,000 Jobs in May as Inflation Remains a Concern
By Tom LoBianco | Quincy News Correspondent
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Washington (Quincy News) — U.S. employers added 172,000 new jobs in May, the Bureau of Labor Statistics (BLS) reported Friday, offering positive news for job-seekers after months of a “no-hire, no-fire” labor market.
Economic forecasters had expected closer to 100,000 new jobs, but the BLS reported substantially stronger hiring, while the unemployment rate held steady at 4.3%. March and April payroll estimates were also revised upward by a combined 93,000 jobs.
But the latest numbers also added to worries that inflation would continue ticking upward, potentially leading to interest rate increases. Stocks fell Friday following the report, with the S&P 500 falling 2.6% while Big Tech stocks also moved lower, marking the market’s worst day in nearly eight months.
President Donald Trump, who has frequently criticized the Federal Reserve during his second term, wrote on his online media platform Friday, “With a great Jobs Report, like just announced, stocks should go up, not down.” The administration had launched investigations into several Federal Reserve officials, including former Chair Jerome Powell, though the inquiry into Powell was ultimately dropped.
But the latest indicator of how businesses have adapted to Trump’s economic policies, including broad tariffs and increased immigration enforcement, feeds concerns that stronger hiring will boost consumer spending, leading to further inflation.
“That’s the interesting thing about inflation, it feeds on itself,” David Mitchell, Professor of Economics and Director of the Bureau of Economic Research at Missouri State University, told Quincy News. “It’s a really interesting economic problem.”
Rising prices can encourage businesses to increase production and add workers, he said. As employment and wages grow, consumers have more money to spend, boosting demand and potentially contributing to an upward price spiral.
BLS reported strong growth in the leisure and hospitality sectors in May, something Mitchell pegged to the typical ramp-up for the summer vacation season, and a drop in construction hiring, which could be attributed to interest rate concerns.
The concern among investors, which helped drive Friday’s stock sell-off, is that one of the Federal Reserve’s tools for combating persistent inflation is raising interest rates to cool consumer spending, as it did during the high-inflation period of the early 1980s, Mitchell said.
Mitchell pegged much of the current economic environment to the continuing ripple effects of the COVID-19 pandemic shock across the globe, something he said economists and others will likely be studying for a long time, much like research on the Great Depression.
The Federal Open Market Committee (FOMC), which sets interest rates, will meet again June 16 and 17. At its April meeting, then-Chair Jerome Powell and the committee kept interest rates steady at 3.50% to 3.75% as inflation remained above the Fed’s long-standing 2% target.
The BLS’ Consumer Price Index (CPI) showed consumer prices were up 3.8% from a year earlier in April. Core inflation, which excludes food and energy prices, rose 2.8% over the same period. The May CPI report is scheduled for release June 10.
Rising energy costs have also contributed to inflation pressures. Economists point to a range of factors, including higher utility bills, growing electricity demand from data centers, and disruptions in global energy markets linked to the war with Iran.
The stronger hiring figures over the past three months seemed to indicate an end to the “no-hire, no-fire” labor market pattern which persisted since Trump’s return to office, Mitchell said. He attributed it to businesses now having a greater sense of certainty.
“Businesses, as a general rule, do not like uncertainty,” Mitchell said, noting that even if businesses do not like tariffs and policies stifling immigrant labor, “if they’re around long enough, (those policies) are no longer an uncertainty.”
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