The Higgins Report: What the Latest Job Numbers Mean

Believe it or not, the Fed’s actions are working

By Joe Higgins, Quest 4 Quality

  • March job growth slowed
  • Employee wage hikes eased
  • Inflation rate falls to 5%

The March Jobs Report 

The March 2023 jobs report showed the economy added 236,000 new positions against expectations of 238,000. While this is a considerable number of additional jobs, it is the smallest gain in the past two years. The Federal Reserve is relieved that this report may finally signify a contraction in the economy. The trend line is obvious — the labor market is cooling down, and the economy will follow right behind. 

Since March, the Fed’s nine interest rate increases have moderated the extraordinary job numbers of 2021 and 2022.

Wages also increased but at a slower rate than over the trailing 12 months. Employee pay was up 4.2% in this month’s report, down from the 4.6% growth from a year ago. The Fed was pleased with this slowdown because wage increases above 4% could push up prices and hold the economy captive to the harm inflation does to consumer spending.

However, for many Americans this news will prove problematic, as the Fed is looking to raise the unemployment level from its current rate of 3.5% to somewhere north of 4.5%. This means that over 1.2 million people across the U.S. could lose their jobs.

While this seems harsh, remember that the Fed has two mandates: full employment and stable interest rates of around 2%. Right now, they are sacrificing jobs in an effort to lower inflation, even if it creates a recession. 

A separate report revealed signs of a contraction. Job openings in February dropped to 9.9 million, which is 18% less than their high in April of last year. And yes, this number is substantial, and the deceleration is a significant concern. 

This is precisely what Fed Chairman Jerome Powell and his board of governors and regional bank presidents have been trying to achieve for the past year — higher rates and slower spending, borrowing and hiring. For better or worse, the best way to control rapidly increasing prices is to slow down demand for labor and wage hikes. And as a result of those nine interest rate hikes, inflation, which was at 9.1% last July, now stands at 5.0%, as per the March Consumer Price Index (CPI).

Don’t get me wrong, we have a long way to go to tame inflation, but for the Fed, this is progress toward its goal of 2%.

The Bottom Line

Over the past year the Federal Reserve has actively been trying to push our economy close to a recession. Chairman Jerome Powell has increased interest rates nine times for a total of 475 basis points over the past twelve months. This represents the most significant increase in rates in U.S. history, and while they have reduced overall inflation, they have had almost no impact on unemployment.

In fact, the unemployment rate is lower today than it was a year ago. Most economists believe it can take this long to see an impact, and it is true that there are trends that indicate the possibility of a slowdown.

Some experts say the Fed is behind the curve and that the economy is near collapse. I don’t believe that. Keep in mind that these same experts began predicting a recession two years ago, and when that didn’t happen, the so-called experts declared there would be a recession in the first quarter of 2023.

If something more significant occurs than the fall of SVB or OPEC cutting back oil production again, that could trigger a recession. But the economy has already dealt with severe shocks and has proven resilient to bad news.

Remember that in the final analysis, the Fed has the tools to lower interest rates, begin an easy money period, and move us out of any level of recession.

Joe Higgins is a 44-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at

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