The US economy posted strong gains in February — which President Donald Trump will almost certainly gloat over, and Federal Reserve officials will almost certainly take as further support for an interest rate hike this month. US companies added about 235,000 workers, higher than the 200,000 jobs the economy has gained in a typical month during the current economic recovery.
February’s report included other good news for workers too. Hourly wages rose by 2.8 percent from a year earlier. With the inflation rate around 2 percent, that means that a typical worker’s paycheck goes a bit further than it did a year ago.
The unemployment rate has held steady at a low 4.7 percent. And the labor force participation rate — which fell dramatically after 2007 and never really recovered — has seen slight gains over the past few months.
It’s too early to say if this is the start of a new trend toward higher workforce participation, but at a minimum it seems that the near-decade-long slide in labor force participation has stopped.
The February numbers are the first to reflect the economy’s performance under Donald Trump’s administration. But it’s too early to attribute very much of the strong economy to Trump’s leadership. The economy saw similar strength in the last few years of the Obama administration, and Trump simply hasn’t made any policy changes dramatic enough to create many jobs. February’s strong numbers mostly reflect the fact that Trump inherited a strong economy from his predecessor.
We can expect economists at the Federal Reserve to be studying these numbers closely. The Fed has been signaling for weeks that it expects to raise interest rates at next week’s meeting. The Fed sees interest rate hikes as necessary to ward off inflation, but the policy could also slow the economic recovery. So the Fed is likely to take this month’s strong job numbers as a green light to tighten monetary policy.