However, consumers are feeling belittled as they struggle with soaring prices for everything from patio furniture and food to gas. Home prices have gone through the roof, but the Federal Reserve has hiked interest rates and adjustable rate mortgages also become more expensive.
The recovery is complicated for the many American households already concerned about their finances in the coming year.
There are no two options: The American job market is very strong right now.
The nation is only about 1% away from recouping all the jobs lost during the Covid pandemic. Between January and March, the US economy added a whopping 1.7 million jobs. Barring a hiccup in December 2020, when mounting infections weighed on job creation, American employers have added a robust number of jobs each month since the recovery began in May 2020.
That’s remarkable and puts the nation on track to recover from the pandemic recession eight years earlier than it did after the Great Recession.
“We are experiencing the fastest labor market recovery in more than a generation and added almost 8 new ones
[million] jobs since [President Joe Biden] took office – accounting for 93% of the jobs lost during the pandemic,” Treasury Secretary Janet Yellen wrote in a tweet
At the same time, wages have climbed higher, rising 5.6% in the year ended February. High demand for labor means companies have to pay more to attract and retain employees.
Data from the government’s monthly Job Vacancies and Labor Turnover Survey shows that while Americans are quitting in droves, the majority are moving on to new jobs for better pay or social benefits.
But despite millions of jobs available and rising wages, things aren’t necessarily feeling good for everyone.
The Bad: Inflation, gas prices and geopolitics
Americans have had a lot to deal with in the first three months of 2022.
The number of coronavirus cases rose sharply earlier in the year as the highly infectious Omicron variant took hold, runaway inflation showed no sign of abating, prices at the pump rose — and then Russia invaded Ukraine and disrupted the global economy .
While the Omicron wave has subsided, there is already a new variant to worry about. However, the other fear factors in early 2022 continue to cast their shadows when the second quarter begins. This confluence of anxiety-provoking factors masks how well things were actually going.
Inflation is at its highest level in 40 years, outpacing sharp wage increases necessitated by labor shortages.
Energy prices, which have risen steadily over the past 12 months, have skyrocketed following the Russian invasion of Ukraine. So a conflict halfway around the world is felt every time Americans fill up their cars. Low earners are particularly affected, who drive more and are less likely to be able to work remotely.
Consumer sentiment fell in March to its lowest level since August 2011 as US families worry about their finances in the coming year.
The contradiction is a dilemma that the Biden administration must grapple with. In a Quinnipiac University poll released Wednesday, 30% of Americans said they think inflation is the country’s most pressing problem right now. Only 14% mentioned the war in Ukraine. The same poll showed that only one in three Americans approved of Biden’s handling of the economy.
The Federal Reserve, independent of the White House, announced the end of its pandemic stimulus late last year. In March, it raised interest rates for the first time since 2018 to get the country’s inflation problem under control.
But central bank tools are dull and take time to work. Americans with adjustable-rate mortgages are more aware of rising interest rates than others, while inflation, for example, is falling slowly. Still, it’s the best the Fed can do. In terms of sentiment, however, rising interest rates will dampen optimism even further in the near term.