The U.S. economy added 175,000 jobs and the jobless rate ticked higher to 3.9 percent in April, according to new Labor Department data released Friday.
The April jobs report fell short of economists’ expectations of 240,000 new jobs and a 3.8 percent unemployment rate.
The latest job report comes days after a Federal Reserve committee voted to hold off on cutting interest rates, which have sat at a range of 5.25 to 5.5 percent — the highest in 23 years — since last July.
While the move was widely expected, an uptick in inflation and other strong economic indicators have shifted the central bank’s rate cut timeline further into the future. Most traders don’t expect the Fed to start cutting rates until September, according to the CME FedWatch Tool, which lurched briefly to November Wednesday.
In explaining its decision to hold interest rates steady, the Federal Open Markets Committee (FOMC), which is tasked with setting monetary policy, said there was a “lack of further progress” in getting inflation back to 2 percent.
Prices were up 3.5 percent in March from a year ago, according to the most recent consumer price index (CPI), drawing further away from the Fed’s goal than it was at the end of last year when the central bank signaled rate cuts in 2024.
“It is likely that gaining such greater confidence will take longer than previously expected,” said Fed Chair Jerome Powell.
Strong jobs gains are positive point for Biden, who is grappling with negative ratings on the economy and inflation. But the slight slowdown in April could eventually give the Fed more room to cut rates and curb a source of economic angst for Americans.
High interest rates have ramped up borrowing costs for Americans, particularly those with credit card debt, a mortgage or a car payment. Household debt also topped $17 trillion during the fourth quarter of 2023, and delinquency rates were on the rise, according to the New York Fed’s Quarterly Report on Household Debt and Credit.
Just 34 percent of voters approve of how Biden has handled the economy, and 29 percent approve of his handling of inflation, according to a recent CNN poll. He’s also trailing former President Trump, the presumptive Republican nominee, who voters perceive would do a better job with the economy than Biden.
As the 2024 election season ramps up, so has scrutiny of the Fed and its interest rate policy.
Progressive Democrats have pressed the Fed to start bringing down interest rates, which they say are burdening the average American and exacerbating income inequality and the housing crisis.
But Trump has suggested Powell would cut interest rates to benefit Democrats in the upcoming election. Although he nominated Powell during his first term, Trump publicly accused Powell in 2018 of raising interest rates to hurt the economy and has said he would not reappoint Powell if he wins the White House in November.
But the Fed is politically independent and does not consider politics in its decision making process, Powell stressed to reporters Wednesday.
“Read all the transcripts and see if anybody mentions in any way the pending election. It just isn’t part of our thinking. It’s not what we’re hired to do. If we start down that road, again, I don’t know how you stop it,” Powell said.
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