Economic Commentary

Economic Commentary

04-05-2024

Strong job and wage growth in March bolsters soft landing, but muddles timing for Fed rate cut

Executive summary

U.S. payrolls added 303,000 jobs in March, well above the consensus expectations of 214,000. That was coupled with upward revisions chipping in another 22,000 to the prior two months, bumping the six-month average to a solid 244,300.

Additionally, the unemployment rate dipped, while average hourly earnings, hours worked, and the labor force participation rate ticked upward. Yet, the gradual cooling trend remains intact as most labor metrics are weaker on a year-over-year basis.

Ultimately, the resilient labor market reflects a solid, albeit cooling, U.S. economy. While this report may muddle the timing for the Federal Reserve (Fed) to cut interest rates, we believe that’s for the better (i.e., a stronger economy is preferable to weaker). That said, incoming inflation data will likely have a heavier weight in the rate cut calculation. We maintain our view that the Fed will reduce rates in the summer, which would ease financing pressures on consumers and businesses alike. 

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