Rapid hiring has bad and worse consequences

U.S. President Joe Biden speaks about January jobs report at the White House in Washington
U.S. President Joe Biden speaks about the economy and the January jobs report, during brief remarks in the Eisenhower Executive Office Building's South Court Auditorium at the White House in Washington, U.S., February 3, 2023.

WASHINGTON, Feb 3 (Reuters Breakingviews) - Exceptionally fast U.S. hiring has worrying consequences. With unemployment dipping to a 54-year low last month, the U.S. Federal Reserve will probably keep hiking interest rates well into 2023. That stands to hurt workers in the long run and crush markets along the way.

The U.S. economy added 517,000 jobs in January, the Bureau of Labor Statistics said Friday. The sum nearly doubled the previous month’s gain and showed the economy on much stronger footing than anticipated. The S&P 500 Index (.SPX) was flat in trading midday.

But Friday’s figure gives way to a harsher reality. Balancing employment is tricky, especially with the Fed laser-focused on inflation. As rates continue to rise, nearly 1 million American jobs are on the line.

Markets, meanwhile, have been bracing for the Fed to pause its hiking plans, not extend them. Investors are in for a painful wake-up call when the central bank pushes rates higher still. (By Ben Winck)

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Editing by Lauren Silva Laughlin and Amanda Gomez

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