US Employers Added 678,000 Jobs in February

U.S. employers added a robust 678,000 jobs in February, another gain that underscored the economy's solid health as the omicron wave fades and more Americans venture out to spend at restaurants, shops, and hotels despite surging inflation.

The Labor Department's report Friday also showed that the unemployment rate dropped from 4% to 3.8%, extending a sharp drop in joblessness as the economy has rebounded from the pandemic recession.

The latest jobs data follows recent reports that have shown an economy maintaining strength as new COVID infections have plummeted since late January. Consumer spending has risen, spurred by higher wages and savings. Restaurant traffic has regained pre-pandemic levels, hotel reservations are up and far more Americans are flying than at the height of omicron.

With omicron cases having eased, America's employers added jobs at a robust pace in February, reflecting an economy that is generally healthy despite high inflation and new risks resulting from Russia's war against Ukraine.

Consumer spending jumped in January, spurred by higher wages and increased savings. Restaurant traffic has reached pre-pandemic levels, hotel reservations have risen and far more Americans are flying than at the height of omicron.

Still, inflation has reached its highest level since 1982, squeezing the nation's households and businesses, with price spikes especially high for such necessities as food, gasoline and rent. Friday's strong jobs report could intensify pressure on the Federal Reserve to raise interest rates to cool growth.

Chair Jerome Powell said Wednesday that he plans to propose that the Fed raise its benchmark short-term rate by a quarter-point when it meets in about two weeks. The central bank's key rate is now pegged near zero.

Powell has acknowledged that high inflation has proved more persistent and has spread more broadly than he and many economists had expected. He said the Fed would likely engage in "a series" of rate hikes this year to try to tame inflation. Those increases will eventually mean higher rates for consumers and businesses, including for homes, auto loans and credit cards.

The Fed chair cautioned that if inflation failed to ease later this year as he expects, he would consider carrying out half-point increases at future central bank meetings. Larger hikes would raise the risk of weakening the economy or even plunging it into recession.

On Thursday, Powell also warned that Russia's invasion of Ukraine will lead to higher prices for gas as well as for such other commodities as aluminum, wheat and corn, thereby keeping inflation higher than it would otherwise have been.

For now, though, despite high inflation, the rapid fading of the omicron variant is likely to accelerate the economy and hiring. In January, millions of Americans missed work because of illness or because they were caring for those who were sick. The drop in COVID cases might have led some of these people to return to work in February.

A survey by The Associated Press-NORC Center for Public Affairs Research found that Americans are now much less worried about COVID than they were in December and January. Mask mandates and other restrictions are ending. More companies are returning to pre-pandemic operations, including working in offices.

Data from the restaurant reservation software provider OpenTable showed that seated diners surpassed pre-pandemic levels late last month. And figures from the Transportation Security Administration reflected a sharp increase in the number of people willing to take airplane flights.

During the omicron wave, businesses barely wavered in their demand for workers. Job openings at the end of December reached near-record levels, with an average of 1.7 available positions for every unemployed person. Historically, there are usually more people out of work than there are jobs.

With many companies desperate for employees, layoffs have plunged. The number of people receiving unemployment aid fell two weeks ago to its lowest level since 1970.

Americans' concerns about inflation have eroded their optimism about the economy. The Conference Board's measure of consumer confidence slipped in February for a second straight month.

Still, other surveys show that Americans are increasingly satisfied with their own financial situations. And people clearly see that many jobs are available, the Conference Board's survey shows.