Economy Jobs Report

An employee straightens displays at a Kohl’s store in Clifton, N.J. on Jan. 26. Seth Wenig/Associated Press

The U.S. economy added 275,000 jobs in February, a sign of strength in the labor market, which continues to benefit workers despite high-interest rates.

The unemployment rate rose slightly to 3.9%, continuing the longest stretch of unemployment below 4% in decades.

The report, which beat expectations, marked the 39th straight month of job gains – in what economists have widely considered an exceptionally strong recovery from the widespread job losses wrought by the pandemic.

“Once again, jobs came in better than expected, pushing back … any recession calls,” Ryan Detrick, chief market strategist at financial advisory firm Carson Group, said in a written note. “The bottom line is our economy continues to chug along, being led by employment.”

As the election year enters full swing, President Biden has repeatedly touted the booming jobs market and easing inflation as a political victory, including in his fiery State of the Union address Thursday night.

And with inflation continuing to ease, Americans’ gloomy feelings about the economy have started to lift.


Still, the report was sprinkled with signs of labor market cooling. Average hourly wage growth slowed considerably in February, compared with January, to $34.57 an hour, but that increase is still 4.3% more than the previous year.

And several demographic groups more vulnerable to job losses – women, African Americans, teenagers and the disabled – saw unemployment rates spike. The unemployment rate for women shot up to 3.9% from 3.4%. The number of workers considered unemployed increased by 334,000 between January and February, up to 6.5 million, from 6 million a year ago.

Health care, government, food and drinking establishments, and social assistance continued to see the largest job gains. Health care employers churned out 67,000 jobs in February, reflecting services for the aging baby boomer population. Public-sector payrolls rose by 52,000, mostly in local and federal government, as coffers have filled up. Food and drinking establishments added 42,000 jobs, after recent sluggish growth, as more Americans and particularly retirees spent more on travel and dining out.

Transportation and warehousing, which had ballooned and then contracted after the e-commerce boom of the pandemic, finally began to pick up again, adding 20,000 jobs in February. Most of those gains were in delivery services and air transportation roles.

January’s job gains, which shocked economists, were revised down significantly to 229,000 (from 353,000), reflecting volatility in the early data.

A year ago, many analysts had predicted that the Federal Reserve’s campaign to raise interest rates to ease inflation would lead the economy into a painful downturn, but that hasn’t happened. The unemployment rate has remained below 4% for more than two years, the longest run since the 1960s. Layoffs remain lower than pre-pandemic levels.


The resilience of the labor market has been aided by the recent expansion of the labor force, particularly the strong return of women who left their jobs during the pandemic and an influx of immigration to the United States. Economists say the arrival of immigrants in particular has been a key factor in closing severe gaps in the economy that have threatened the country’s ability to recover from pandemic shutdowns.

Among those immigrants is Ricky Chiu, who fled Hong Kong for Texas in late 2021 after authorities arrested him for participating in a mass demonstration against the Hong Kong government, causing him to fear further retribution if he remained, he said. An asylum seeker, Chiu now works in information technology at a law firm in Houston, where he is “able to have a normal life,” he said.

But Chiu, 37, worries about the perception that asylum seekers like himself “are leeching off the resources of this country,” he said. “I would say we have a net positive effect on the job market. We are contributing to this society.”

The labor market has cooled since its peak during the reopening of the economy following COVID-19 lockdowns. Workers have stopped quitting their jobs en masse. Employers have eased off hiring. And there are now roughly 1.4 job openings for every unemployed worker in the United States. That ratio gives workers continued leverage in the labor market but is down from the two job openings for every unemployed worker last year.

Economists do expect the unemployment rate to climb in 2024 as the full impact of high-interest rates ripples through the economy – with a recent Congressional Budget Office report projecting that unemployment will rise to 4.4% by the end of 2024. Other data shows that some employers who had been proceeding cautiously are beginning to resume investing in their workforce in anticipation of the Federal Reserve cutting interest rates in the summer.

Some economists worry that recent job gains that are concentrated within only a few sectors could spell trouble on the horizon, as the broader economy becomes more vulnerable to shocks within a specific sector.


“Is it enough to be carried by these sectors, or do we need gains that are more broad-based? That’s the question that needs to be answered,” said Diane Swonk, chief economist at KPMG. “I’d like to see more broad gains before I feel comfortable.”

The construction industry, which is vulnerable to interest rate hikes, has seen moderate growth at best over the past year, with certain niches within the market feeling the pinch more than others.

At Forrest Street Builders, a high-end custom home builder in Denver, business has been slow this winter. Ian Price, the company’s president, said that’s because his typical clients are in their 40s and 50s, largely already homeowners and less willing to scale up to new, larger homes “because of interest rates” – instead opting for remodels.

But the slowdown has also meant it’s easier to hire construction workers, Price said, without having to pay more to attract them from other firms. This month, he posted two construction positions online and received 90 job applications within a few days.

“During COVID, we had to make sure we held on to the talent we had and up our wages because McDonald’s was paying $20 an hour and because of inflation,” Price said. “[Now] we don’t have to offer a premium off of the bat like we used to.”

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