We wrote about January’s huge jobs report last week — a net addition of 517,000 non-farm payrolls, far ahead of the expected 188,000, while the unemployment rate fell further to just 3.4%, the lowest since 1969. Businesses are raising wages to compete for employees, in order to meet consumer demand.
The US economy has started 2023 on a much stronger-than-expected footing, adding confusion to markets as expectations reflected in stock and bond markets diverged further.
Despite the sharp interest rate hikes over the past one year — the federal funds rate (FFR) has risen from 0%-0.25% to the current 4.5%-4.75% — consumption, which makes up some 70% of economic activities, is holding up remarkably well.
