Question

What do you think about this topic?

“U.S. Job Gains Show Employers Shrugged Off Government Shutdown

The economy added 304,000 jobs in January, the 100th consecutive month of payroll gains. Unemployment ticked up to 4 percent, possibly a shutdown-related anomaly”.

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Answer 1

The reasons for the same is as follows:

The economy added 304000 jobs in January, the 100th consecutive month of payroll gains.Unemployment ticked up to 4 percent, possibly a shutdown-related anomaly.

Over the past eight years, the American economy has endured trade tensions, debt-limit standoffs, foreign-policy crises and all manner of natural disasters. Through it all, companies kept on hiring.

The resilience continued in January as employers shrugged off both the month long shutdown and fears of an economic slowdown to add 304,000 jobs, far more than forecasters had anticipated. The report from the Labor Department marked the 100th consecutive month of job gains, more than double the previous record.

This is due to the effects on spending, investment and output should show up in other government reports, some of which were themselves delayed by the shutdown. Those disruptions didn’t deter employers, however. The unemployment rate rose slightly, to 4 percent, at least partly because of the idling of hundreds of thousands of federal workers. But hiring in the private sector was strong and broad-based, with manufacturers, retailers and construction companies all adding jobs. Wage growth, which has picked up in recent months after years of sluggish gains, remained solid, and the strong labor market continued to pull in workers from the sidelines.

The Labor Department did revise downward its estimate of December hiring by 90,000 jobs, an unusually large adjustment. But the strong growth in January, combined with upward revisions to earlier months, meant that the pace of hiring, averaged over six months, actually rose.

The main reason for the same is that- combination of strong hiring and modest wage gains has put the economy on a strong, sustainable footing. More jobs means more income for consumers, which leads to more spending, and in turn more hiring.

Michael Gapen, Chief United States economist for Barclays said that “The virtuous cycle continues,”.“What’s kept this recovery going, what’s kept the U.S. economy so resilient to all the things that have clouded the outlook, is a virtuous cycle of a continuously growing U.S. labor market.”

None of the threats to the economy over the past several years have disrupted that central pattern. The shutdown, for example, caused ripple effects throughout the private sector, but companies and businesses also found ways to cope. Ben Herzon, an economist for Macroeconomic Advisers, a forecasting firm, said that as a result, the shutdown’s economic impact might be more muted than simple economic models might suggest.

The shutdown does help explain why the unemployment rate ticked up in January. Unlike the monthly hiring figures, which come from a survey of employers and are based on their payrolls, the unemployment rate is based on a survey of households. In that survey, 175,000 more people than in December reported themselves as being unemployed because of a “temporary layoff” — a total that included government workers.

“Where’s your shutdown impact? There it is,” said Brett Ryan, an economist for Deutsche Bank in New York. “It just showed up in the unemployment rate.”

It is cautious but still hiring is going on.

Economists have become increasingly concerned in recent months about a range of possible threats to the United States economy. Growth has slowed in Europe and China; trade tensions are threatening the American manufacturing sector; stock market jitters could make consumers less likely to spend; and the shutdown, of course, could erode confidence among consumers and businesses.

None of that, however, has yet affected the job market.

Due to this there may be more complication for policy holders.