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The Fed: Fed is not going to change its hawkish ways: What economists are saying about the April jobs report

The U.S. April jobs report released Friday showed the U.S. economy added a larger-than-expected 428,000 jobs last month, with the unemployment rate holding at 3.6%.

Read: U.S. gains 428,000 jobs in April and wages rise again

Economists surveyed by the Wall Street Journal had expected a gain of 400,000 jobs and for the unemployment rate to slip to 3.5%.

Below are initial reactions from economists as U.S. stocks
DJIA,
-0.34%

SPX,
-0.42%

continued their downward trend in the wake of this week’s Fed meeting, where Fed Chairman Jerome Powell signaled the Fed would hike its benchmark interest rate by a half-percentage point at the next two meetings in June and July. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.096%

rose close to 3.1% as inflation remained in focus.

“With labor market conditions still this strong – including very rapid wage growth – we doubt that the Fed is going to abandon its hawkish plans because of the current bout of weakness in equities,” said Paul Ashworth, chief U.S. economist at Capital Economics.

“The labor market is still extremely strong. But I think it is going to start to weaken. And so, this is why the Fed needs to act sooner rather than later because they’ve got a small window. With the unemployment rate below 4%, they are going to be able to continue to raise rates without getting too much political pressure. Once the unemployment rate gets to 4%-5%, it is going to be much more difficult for them to move. That why they’ve got to move those 50 basis points each meeting,” former Fed Gov. Randy Krozner.

“Today is not a time to be splitting hairs. The bottom line is that, regardless of the monthly swings in the data. which can at times be noisy, we know with a high degree of certainty that the labor market is overheated, with job openings and quits at an all-time high,” said Stephen Stanley, chief economist at Amherst Pierpont.

“This is a good report. I am concerned about the decline in the participation rate. This is part of the reason we’ve been seeing pressures on wages – if workers are dropping out the pressure on wages could continue. The question is where is the Fed going to end up. I am a bit skeptical that the Fed is going to be able to get us to a soft landing and not cause a recession given where we are with inflation and unemployment. So there are some signs of concern. It is maybe the quiet before the storm,” said Nada Eissa, professor of economics at Georgetown University.

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