February added 275,000 jobs, posting another consecutive month of solid job growth, according to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics (BLS).
Job growth was short of January's original tally of 353,000 jobs but above the revised number, which showed job growth was just 229,000. December and January combined were 167,000 lower than previously reported. February's job growth was seen across several industries, including health care, government, food services and drinking places, social assistance, and transportation and warehousing.
The unemployment rate increased by 0.2 percentage points from the previous month to 3.9%, pushing the number of unemployed people in the country up by 334,000 to 6.5 million. According to the BLS, the unemployment rate has ranged from 3.4% to 3.9% since March 2022.
The average hourly earnings for private employees rose 4.3% in the last year and increased by 0.1% from the previous month. This means wages have ranged between 4.3% and 4.5% for seven straight months and workers continue to see real growth in their spending power, except in housing. The continued gain in wages also does not help push inflation closer to the Federal Reserve's 2% target and could delay the plan to dial back interest rates.
"There have been several recent readings that have shown inflation to be hotter than expected," Dan North, Allianz Trade Americas senior economist, said in a statement. "If this employment report continues to show strong job growth and wage increases, the Fed may not cut until September. That indeed makes this a very critical report. It could be that classic good news equals bad news reports. Good news of a strong labor market brings the bad news of rate cuts that seem to get further away."
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SOCIAL SECURITY: COLA INCREASING BUT MEDICARE COSTS RISING TOO IN 2024
Home price gains have outpaced wage growth despite its resilience. Home prices now stand 5.5% above where they were this time last year, according to the most recent S&P CoreLogic Case-Shiller Indices report.
The 10-city composite increased by 7% annually, up from a 6.3% increase in the previous month. At the same time, the 20-city composite posted a rise of 6.1%, up from a 5.4% increase in the previous month. The growth in home prices comes even as borrowers struggle with high mortgage rates.
One key to bringing down housing and rent costs is adding more homes to the market, according to Realtor.com Chief Economist Danielle Hale. Realtor.com's analysis of housing supply and household formation suggests that the U.S. has built between 2.5 and 7.2 million fewer homes than households over the last decade.
"Adding more housing would alleviate cost-pressure on one of the biggest budget items for families, taking the pressure off of inflation," Hale said.
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AMERICANS LIVING PAYCHECK TO PAYCHECK OWN 60% OF CREDIT CARD DEBT: SURVEY
The sustained gain in wages and employment means that potential homebuyers, currently sidelined by affordability challenges, are likely to get little relief from high borrowing costs.
However, there is one bright spot for first-time home buyers. President Joe Biden announced a plan during his State of the Union address on Thursday evening to help first-time buyers recoup high borrowing costs. If passed by Congress, the mortgage relief credit would give middle-class first-time homebuyers an annual tax credit of $5,000 a year for two years, according to a fact sheet from the U.S. Department of Housing and Urban Development (HUD).
"This is the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home and will help more than 3.5 million middle-class families purchase their first home over the next two years," HUD said.
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