President Joe Biden is scheduled to attend a campaign rally in Madison, Wisconsin on Friday after a new jobs report showed the U.S. economy added 206,000 jobs and indicated the U.S. economy’s ability to withstand continued high interest rates.
The event is scheduled to begin at 2:15pm ET. Watch it in the player above.
Last month’s payroll growth was down from 218,000 in May, but it was still a strong increase and reflects the resilience of America’s consumer-driven economy, which, while slowing, is still growing steadily.
Still, the Labor Department’s report released Friday included some signs of a slowing job market: The unemployment rate rose to 4.1% from 4%, which, while still low, was the highest since November 2021. The increase in unemployment is mainly because 277,000 people started looking for work in June, but not all of them found work right away.
The government also sharply cut its forecast for job gains in April and May by a combined 111,000 jobs, and said average hourly earnings rose just 0.3% from May and 3.9% from June 2023. The year-over-year figure marks the smallest increase since June 2021 and will be welcomed by the Federal Reserve as it seeks to get past inflation once and for all.
As the presidential election campaign heats up, the state of the economy is weighing on voters’ minds. Despite stable jobs, relatively few layoffs and a gradual decline in inflation, many Americans remain outraged by high prices and hold President Joe Biden to blame.
Economists have repeatedly predicted that the high interest rates imposed by the Fed would slow the job market, but job growth has been unexpectedly strong. Still, there are signs that the economy is slowing ahead of a series of Fed rate hikes. U.S. gross domestic product (the total production of goods and services) grew at a sluggish 1.4% annual rate through January-March, the slowest quarterly growth in nearly two years.
Consumer spending, which accounts for about 70% of total U.S. economic activity and has driven the economic expansion over the past three years, grew just 1.5% in the fourth quarter after growing more than 3% in each of the previous two quarters. And job ads have been declining steadily since hitting a record high of 12.2 million in March 2022.
Yet after struggling to replace staff over the past two years, employers may not be hiring as aggressively, but they aren’t cutting many staff either, and most workers are enjoying unusual job security.
Between 2022 and 2023, the Fed raised interest rates 11 times, raising its key interest rate to its highest level in 23 years, in an attempt to overcome the worst inflation surge in four decades. This resulted in significantly higher borrowing rates for consumers and businesses, which was widely expected to trigger a recession, but that did not happen. Instead, the economy and job market have shown remarkable resilience.
Meanwhile, inflation has been falling steadily to 3.3% from a peak of 9.1% in 2022. Speaking at a conference in Portugal this week, Fed Chairman Jerome Powell noted that U.S. price growth is slowing again after rising earlier this year, but he cautioned that policymakers need more evidence that inflation is heading toward the Fed’s 2% target before cutting rates.