Economist Noah Williams Comments on the April Jobs Report
While the United States economy has shown some signs of turbulence over the past few weeks, the labor market continues to power ahead. The Bureau of Labor Statistics reported this morning that the US added 428,000 jobs in the month of April, which coincidentally is exactly the same increase as March’s revised gain. While a slight slowing from the torrid pace of expansion at the end of 2021, this represents continued labor market strength. Separately, this week the BLS reported that job openings hit a new record high at 11.5 million vacancies. There are now nearly two job openings for every unemployed worker, which is by far the highest this ratio has ever been. Quits also hit a new high, as workers are taking advantage of new opportunities in the tight market to find better jobs. Thus even though there are some different indications in financial and goods markets, the labor market remains historically tight.
Also this week came an acceleration of the Federal Reserve’s tightening of monetary policy in an effort to rein in inflation, which led to financial market gyrations. The rapid rise in long-term interest rates has started to cool a torrid housing market, with mortgage rates jumping more than 2 percentage points in recent months. Separately, the decline in GDP in the first quarter of 2022, although driven to some degree by technical factors, raised some concerns about the continuation of the expansion in output.
With inflation continuing at 40-year highs, and the Fed being behind the curve on policy, interest rates will continue to rise for the next several months. This further tightening should continue to weigh on markets. While a fabled “soft landing” of slowing inflation without tipping the economy into recession may be a difficult task, today’s jobs report gave hope that there is some landing room.
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Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.