Another shockingly good jobs report shows America’s economy is booming

Some investors say that the labor market’s continued show of resilience confirms that an interest rate cut is off the table in March. Federal Reserve Chair Jerome Powell had signaled as much on Wednesday, after the central bank held rates steady at a 23-year high.

“Clearly, May 1st is the earliest month that the Fed will commence cutting key interest rates. Then hopefully the Fed will have additional key interest rate cuts at its meetings in June, July and September,” wrote Louis Navellier, chairman of Navellier & Associates, in a note Friday.

Traders see a roughly 21% expectation of a rate cut in March, down from 46% last week, according to the CME FedWatch Tool.

Next week, US Secretary of the Treasury Janet Yellen is set to testify before the Senate Banking Committee, in the aftermath of the regional banking crisis last year.

Investors will also be watching for clues about the health of the US financial system, after a surprise $252 million loss in fourth-quarter profits from New York Community Bancorp thrust regional banks back into focus.

Tech stocks were the winners of Friday’s session, following strong earnings reports from Meta Platforms and Amazon the prior evening.

Meta Platforms shares jumped 20.3% to close at a record high of $474.99 after the company reported a surge in profit, its first-ever cash dividend and a $50 billion share buyback.

Amazon shares rose 7.9% after the e-commerce giant reported solid earnings for its latest quarter.

Other tech stocks also saw a boost. Shares of Nvidia popped roughly 5% to a record-high close of $661.57. Meta and Nvidia both also logged new all-time highs during the middle of the session.

Microsoft shares rose 1.8% to a fresh record-high close of $411.22.

Stocks’ gains weren’t even across the market. The equal-weighted S&P 500 index, which gives each stock the same influence over its performance, fell 0.8% on Friday.

The Russell 2000 index, which tracks the performance of US small-cap stocks, declined 0.5%.

As stocks settle after the trading day, levels might change slightly.

US stocks rose on Friday as investors continued to parse strong tech earnings and a searing jobs report.

The Dow rose 135 points, or 0.4%. The S&P 500 gained 1.1% and closed at a record high. The Nasdaq Composite climbed 1.7%. All three major indexes ended the week higher.

The US economy added a staggering 353,000 jobs in January, blowing past economists’ expectations of 176,500 jobs last month, according to fresh data from the Bureau of Labor Statistics released Friday morning.

The hot job market is creating a positive feedback loop in the American economy, White House economist Jared Bernstein said Friday.

During a Zoom with reporters, Bernstein argued that the blow-out January jobs report “tells an unequivocal story of a very strong jobs market.”

Bernstein, chair of the White House Council of Economic Advisers, pointed to how unemployment has remained below 4% for the 24th month in a row.

The strength in the job market is powering a “virtuous cycle” in the economy, Bernstein said, noting that consumer spending makes up 70% of GDP.

The thinking is that as long as consumers have jobs, and paychecks are beating inflation, Americans can keep shopping. And that in turn should create new jobs, and so on.

Still, some economists worry the January jobs report paints a picture of a job market that is too hot — a concern that could prevent the Federal Reserve from cutting interest rates anytime soon. 

Bernstein declined to weigh in on Fed policy, but said the White House is “always happy to see a very strong jobs market.”

“We’re particularly happy to see wages outpacing prices. That’s so important for families like the one the president grew up in,” he said.

The S&P 500 was higher Friday after white-hot tech earnings balanced out some negative sentiment from the blowout jobs report, which left investors mulling the Federal Reserve’s next move.

But the Dow Jones Transportation Average, which tracks 20 US transportation stocks from railroads to airlines to delivery, has fallen 1.6% this year through Thursday’s close, underperforming the broader Dow industrials’ 2.2% gain during that same period.

That’s a reversal from the transportation index’s nearly 6% gain in December, as optimism that the economy would see a soft landing, or a marked decline in inflation without spurring a recession, sparked a gangbusters “everything” rally across markets.

As that optimism dims, some investors worry that the decline in transportation stocks suggests rough times ahead for the economy. The transportation index tends to fall when the economy deteriorates, as demand for travel and goods wanes.

On Friday mid-afternoon, the Dow transports rose 1.2% as investors parsed the blockbuster January jobs report. But small-caps continued to slide. The Russell 2000 fell 0.9%.

Read more here.

US worker productivity grew 3.2% in the fourth quarter, surpassing expectations for a 2.1% gain, according to a Bureau of Labor Statistics report released Thursday.

That’s a key piece of data, since productivity growth can help reduce inflationary pressures.

More good news for American households came in the wage growth data released Friday as part of the jobs report. While the estimated 4.5% annual hourly earnings growth may trigger a dull headache for the Federal Reserve, it’s ultimately good for the American psyche, said Joe Brusuelas, chief economist and principal at RSM US.

“It’s about jobs, and it’s about what people make, and this data reflects the increase in productivity. Improved productivity leads to improved number of jobs, better pay and rising living standards. It’s that mythical tide that lifts all boats.”

Diane Swonk, chief economist of KPMG, told CNN this week that rising productivity could likely be attributed as a result of the interest rate hikes and the labor market getting back into better balance following the pandemic recovery.

“What we saw as rates went up is that finally workers that were in their jobs got to learn their jobs and get training that had been completely sidelined by the hiring frenzy,” she said. “That helped productivity growth, along with the fact that firms could finally take a breath and leverage the technologies that they so rapidly embraced online.”

Stocks rose Friday midday as investors continued to look through the latest jobs report.

The Dow rose 43 points, or 0.1%. The S&P 500 gained 0.9% and the Nasdaq Composite climbed 1.5%.

All three indexes are on pace to end the week higher, despite the selloff on Wednesday after Federal Reserve Chair Jerome Powell signaled that the central bank is unlikely to cut rates in March. The supercharged January jobs report supports that indication, some investors say.

While the leisure and hospitality industry added a mere 11,000 jobs in January, the critical service sector registered its 36th consecutive month of job gains. Post-pandemic, services businesses have benefited from Americans’ strong desires to spend money on experiences.

As that demand remains at a fever pitch, one new bar and restaurant in Minneapolis is seeing the effects.

Jillian Hiscock is about a month away from opening A Bar of Their Own, which exclusively will show women’s sporting events. The concept, inspired by The Sports Bra in Portland, Oregon, has garnered overwhelming support from the Twin Cities community since Hiscock floated the idea last spring and ran a crowdfunding campaign to get it off the ground.

The same was true for the hiring efforts: Hiscock received 150 applications in two days’ time for 25 to 30 open positions.

“Since things have opened back up [following the pandemic], we’ve had a lot of folks whose relationships with work has fundamentally changed,” she said. “Showing up and just doing a thing for somebody that you feel doesn’t care about as a human is less interesting to people now, because we all know how quick that can be taken away.”

People want a better balance between their job and personal life, she said.

“People were really excited about this, not just seeing this as another job, but seeing this as an opportunity to be a part of something bigger,” she said.

President Joe Biden touted the Labor Department’s latest jobs report showing that hiring accelerated in the beginning of the year as unemployment remained historically low, saying it shows “America’s economy is the strongest in the world,” in a statement Friday.

The commander in chief noted the remarkable milestones the job market has achieved: The unemployment rate has been below 4% for 24 straight months and the US economy has created nearly 15 million jobs since January 2021.

“It’s great news for working families that wages, wealth, and jobs are higher now than before the pandemic, and I won’t stop fighting to lower costs and build an economy from the middle out and bottom up,” Biden said. “I’ll continue to stand in the way of efforts by Congressional Republicans to enact massive tax giveaways for the wealthy and big corporations; cut Medicare, Medicaid, and Social Security; and raise costs for American families.”

But a new CNN poll conducted by SSRS reflects that Biden still isn’t getting credit for economic gains on his watch. 55% of Americans say they feel Biden’s policies have worsened economic conditions.

This job market keeps rewriting the history books.

The latest superlative: The unemployment rate has now stayed safely below 4% for two full years. The last time the unemployment rate was this low for this long, Richard Nixon was in the White House.

“The fact that the unemployment rate has been below 4% for 24 months straight for the first time since 1967 is truly remarkable,” Joe Brusuelas, chief economist and principal at RSM US, told CNN. “And that’s the word I keep saying as I look through this report: ‘This is remarkable.’ ‘Remarkable,’ is the takeaway here.”

More than a year ago, it seemed all but certain that the labor market would feel the effects of — and potentially be reeling from — the Federal Reserve’s aggressive rate-hiking campaign. But 11 hikes and four pauses later, the US job market is registering one of the longest periods of expansion this century.

The unemployment rate stayed below 4% for 27 months in a row, starting in November 1967 under President Lyndon B. Johnson through January 1970, according to federal data. 

During Covid-19, the unemployment rate spiked to as high as 14.8% in April 2020 before falling rapidly.

Many economists expected the jobless rate would rise above 4% as the Federal Reserve spiked interest rates to fight inflation. As recently as last March, Fed officials projected the unemployment rate would be 4.5% in 2023.

Americans continued to feel more upbeat about the economy this month, according to the University of Michigan’s latest consumer survey released Friday.

Consumer sentiment soared 13% in January, according to the university’s final reading, confirming what a preliminary estimate showed earlier this month. Sentiment reached its highest level since July 2021, “reflecting improvements in the outlook for both inflation and personal incomes.”

“After reserving judgment last fall about whether the slowdown in inflation would persist, consumers now feel assured that inflation will continue to soften,” Joanne Hsu, the university’s Surveys of Consumers director, said in a release. “Sentiment has resumed the upward trajectory from the all-time low measured in June of 2022, which had stalled in the late summer and fall of 2023.”

Indeed, inflation slowed markedly throughout 2023 as both economic growth and the job market remained on strong footing. It’s clear that inflation weighs heavily on US consumer sentiment. Sentiment reached a record low in June 2022, which was the same month that inflation reached a four-decade high.

Still, the university’s sentiment index remains well below pre-pandemic levels, but if inflation continues to cool further, then sentiment would likely follow suit, recovering further. The job market holding steady would also boost US consumer moods, since personal incomes were also a big reason why sentiment jumped in January.

The US economy added a whopping 353,000 jobs in January, racing past economists’ expectations.

Here’s what Wall Street has to say:

Former President Donald Trump said the economy would tumble. He said the stock market is booming because of the prospect of his victory. And he’s promoting conspiracy theories about the Fed considering rate cuts to favor President Joe Biden.

Former South Carolina Gov. Nikki Haley has attacked Biden’s record on inflation and the cost of living.

But the economy, fresh off a shockingly strong year in 2023, is expected to grow at an even stronger 4.2% rate in the first quarter. And today’s jobs report shows America’s economy remains surprisingly strong.

A new CNN poll shows Biden still has a lot of convincing to do: Perception of the economy remains deep under water. But the mood is heading in a positive direction — which should come as a relief to Biden, because the economy is one of his weakest issues, according to favorability polls. However, if hiring remains strong and inflation keeps falling, it may become easier for Biden to convince voters he’s doing a good job strengthening the economy.

Wage growth picked up in the beginning of the year, remaining at historically strong levels not seen in pre-pandemic times.

Average hourly earnings for private workers rose by 19 cents in January, or 0.6%, to $34.55. That’s a stronger monthly gain than December’s 0.4% increase. From a year ago, wages were up 4.5%, down slightly from 2023’s peak of 4.7%, but well above any annual wage increase on Labor Department records going back to 2007.

That means Americans might just be gaining more spending power. Inflation slowed markedly throughout 2023, not showing any signs of picking up in the final months of last year. If inflation gauges due later this month show that price hikes continued to cool in January, or simply held steady, then that’s a big win for American workers who are continuing to earn more.

For the Fed, strong wage growth could make it harder to successfully defeat inflation. That’s because strong wage growth points to employers’ labor costs rising, and those higher costs could be passed on to consumers, but another key factor economists consider is productivity.

Wage gains can indeed be robust without stoking inflation — if productivity is keeping up. The goods new for now is that data this week showed that productivity, measured as nonfarm employee output per hour, rose at a solid 3.2% annualized rate in the fourth quarter.

US stocks opened mixed on Friday following a stronger-than-expected jobs report and earnings beats from tech giants Amazon and Meta. 

The blue-chip Dow Jones Industrial Average lost 63 points, or 0.2%, on Friday morning. The S&P 500 was up 0.2% and the tech-heavy Nasdaq Composite was 0.3% higher.

Investors are closing out a week full of labor data with a January jobs report that far exceeded Wall Street’s expectations. The economy added 353,000 jobs and the unemployment rate remained unchanged at 3.7% last month. Wages also grew by 4.5% year over year. 

The news pushed Treasuries higher – the yield on the 10-year Treasury was up about 0.14%, and crossed the 4% threshold. 

In the past, a strong labor market has worried Wall Street because the Federal Reserve has cited it as a reason to keep interest rates higher for longer. But at the central bank’s January meeting, Fed Chair Jerome Powell indicated that Wall Street should treat good news as good news.

“I think we look at stronger growth, we don’t look at it as a problem,” Powell said. “At this point, we want to see strong growth. We want to see a strong labor market. We’re not looking for a weaker labor market. We’re looking for inflation to continue to come down as it has been coming down for the last six months.”

In corporate news, Big Tech popped after Amazon and Facebook-parent Meta beat earnings expectations. 

Meta shares soared by about 16% after the company also announced a $50 billion share buyback program and said it would pay a quarterly dividend for the first time.

Amazon shares grew by 6.1% following an earnings beat. 

Apple shares, however, slid 2.9% after the company said sales in China had declined.

A whopping number of jobs were added last month — so how did the unemployment rate hold firm at 3.7%?

By definition, the unemployment rate captures the share of unemployed people as a percentage of the labor force. The labor force is the total number of people employed and unemployed. To be considered unemployed, you don’t necessarily have to have been laid off recently.

The Bureau of Labor Statistics classifies someone as unemployed if they aren’t working but are available for work and made a specific effort in the past month to find a job. If they don’t satisfy that criteria, they aren’t considered part of the labor force.

What that means is the unemployment rate will increase when the number of unemployed people increases by more than the number of employed people in a given month.

There’s one other wrinkle, though. The so-called “headline jobs number,” or the number of jobs that were added in a month, is a product of a different survey than the one used to calculate the unemployment rate. That’s another reason why there can be months when a lot of jobs are added and the unemployment rate increases.

The latest jobs data shows that America’s job market remains shockingly robust in the face of the highest interest rates in 23 years.

And the January report could have finally quelled Wall Street’s belief that the Federal Reserve could start to cut interest rates as soon as March, according to futures.

About a month ago, the odds of a March cut were north of 75%, but as of Friday morning, they were below 19%, according to the CME FedWatch tool. The Fed’s March 19-20 meeting is still several weeks away and many economic reports are due by then, but investors finally seem to be coming to grip with what Fed officials have been communicating all along.

At this week’s Fed policy meeting, Fed Chair Jerome Powell pushed back on the market’s expectation of the first cut coming in the spring, saying that “there was no proposal to cut rates,” and that cutting in March is “probably not the most likely case.” Officials need to see “greater confidence” that inflation is on a sustainable path toward 2% before considering rate cuts, he said.

Friday’s report does not necessarily worry policymakers at the central bank because inflation has come down substantially since reaching a four-decade peak in the summer of 2022 as the labor continued to hum along. But economists widely agree that it will be highly unlikely for inflation to drift all the way to the Fed’s 2% target without a further weakening in the job market.

Inflation’s slowdown in recent years was mostly due to supply-side developments, such as improving supply chains, so the final mile of the Fed’s historic inflation would have to be helped along by waning demand.

The January jobs report shows that demand is expected to remain solid, with Americans employed and enjoying strong wage growth.

“So much for imminent recession fears,” said Mark Hamrick, senior economic analyst at Bankrate.

“The US economy has continued a surprisingly robust sustained recovery after the pandemic, working through the elevated number of job openings and with prices that remain elevated after inflation has come off full boil. This moderation, or normalization, still has some way to go,” he said in a note Friday.

And the jobs data offers more good news for American households.

“Workers were making more money, broadly speaking. Average hourly earnings are up 4.5% over the past 12 months, marking an acceleration. Some of this stems from the boosts in minimum wages in 22 states and dozens of localities as the year began,” he said.

But even though interest rates remain high, that’s not all bad. There are many low-risk options to get the best yield on funds you plan to use within two years, and also on cash you expect to need within the next two to five years.

Read more here about how to take advantage of the current high interest rate environment.

Friday’s whopper of a jobs number was double expectations, and December’s data was one of several months to get heavily revised. Why are economists’ forecasts frequently so wrong?

It’s nearly impossible to say with certainty how much prices rose or how many people were hired at a given point in time across an entire country’s economy. Finding out how many new hires there were in a given month would involve asking every employer how many people were on their payrolls. That’s why the government and other economic data providers often rely on surveys to make sophisticated estimates.

The BLS, Census Bureau and other government agencies that conduct surveys that inform economic reports do rigorous work to make the best possible estimates with the information they gather. And more often than not they do a tremendous job at it.

But surveys, by nature, are imperfect.

In the same way that election polls don’t always predict the candidate who ends up winning, surveys don’t capture the exact true picture. However, they can get pretty close to the truth.

In election polls and government surveys, there’s a sample size of respondents designed to be representative of the overarching group studied. The larger and more diverse a sample, the closer an estimate will be to the true value.

Getting a large and diverse sample requires a lot of outreach to recruit people to be part of a group that BLS and other agencies enlist to regularly respond to a given survey. The rate at which people are getting recruited for surveys that are used in many of BLS’ monthly reports including employment, Consumer Price Index and Job Openings and Labor Turnover are down sharply from before the pandemic.

But Laura Kelter, national estimates branch chief within the division of Current Employment Statistics at the BLS, told CNN the declines can be attributed to a variety of challenges including the voluntary nature of participating in the surveys as well as survey fatigue — that is, people getting bombarded with too many surveys.

Changes in technology like caller ID and spam filtering, and heightened concerns about confidentiality and data security are also at play.

The US economy added 353,000 jobs last month, according to Bureau of Labor Statistics data released Friday, registering a far stronger than expected gain to kick off 2024.

January’s gains blew economists’ expectations out of the water: Consensus forecasts had called for a net gain of 176,500 jobs last month, according to FactSet.

The unemployment rate remained at 3.7%.

It’s the 24th consecutive month that the nation’s jobless rate has been under 4%.

This story is developing and will be updated.

US futures rose ahead of Friday’s key jobs data from the Bureau of Labor Statistics and after a slew of positive tech earnings.

Nasdaq futures are higher, led by a 17% spike for Facebook owner Meta, which just unveiled its first-ever dividend. Dow futures were just above flat and S&P 500 futures rose 0.5%.

Shares of Meta Platforms surged on Thursday after hours by 17% after beating earnings expectations and announcing it would pay dividends. Amazon popped by 6% but Apple shares dropped by 3% after a disappointing quarter in China, its third-largest market.

Meanwhile, investors mulled over Wednesday’s Federal Reserve policy decision not to cut rates in March.

The Dow gained 370 points, or 1% at the closing bell Thursday, recouping all of its losses on Fed Day and landing at new all-time highs. The S&P 500 grew by 1.4% and the tech-heavy Nasdaq composite was also 1.4% higher. 

One sector still hurting: Regional banks. Led by New York Community Bancorp, bank stocks remained under heavy pressure yesterday, bringing back bad memories of last year’s bank meltdown.

Just 26% of Americans say they feel the economy is starting to recover from the problems of the past few years, according to a new CNN poll.

Nearly half (48%) say the economy is still in a downturn. (It’s not).

When Americans who say the economy remains in a downturn were asked to explain why they feel that way, most cite inflation and the cost of living generally (50%) or the price of specific items like food (9%) or housing (7%), with many pointing to their own financial situations. Another 13% who feel the economy is still in decline cite Biden or Democratic policies, and 9% name wages and income. Fewer mention jobs, gas prices or the stock market.

But the good news is that these numbers are an improvement, slightly, from July 2023, when 51% said a downturn and just 20% said things are recovering.

The poll found split views along partisan lines: Of those who say the economy is recovering, nearly three-quarters (73%) say Biden policies have helped. But out of those who say things are getting worse, 83% blame Biden policies. 

Overall, 42% of all Americans say their financial situation is worse than it was a year ago, down from 49% who felt that way in December 2022 when the nation’s inflation rate was nearly double what it is today.

In the new poll, 37% say they’re doing about the same as a year ago, and 20% that they’re now doing better.

January is typically a big month for job losses, with seasonal workers being let go after the holidays and other companies tightening their belts at the outset of the calendar year.

That can make the January jobs report among the trickiest to forecast, said Sarah House, a senior economist with Wells Fargo.

“We’re going to have new seasonal [adjustment] factors for a month that is the most seasonal of any month,” she said. “That makes it pretty difficult just right off the bat, never mind that we’re coming off a December that was on the warmer side and could have supported hiring in December.”

To better see the underlying trend for this and other months, the BLS applies seasonal adjustment factors to smooth out the data. Those are updated annually in January.

All told, there’s a chance for an upside surprise in the numbers, Boussour wrote, noting that EY expects a monthly gain of 275,000 jobs.

Friday’s jobs report also will include the final annual benchmark review of payroll data for the 12 months that ended in March 2023. Preliminary data showed that US job growth was weaker than previously thought by 306,000 jobs (or about 25,000 fewer per month).

“As is typically the case, we expect the final revision to be very close to the preliminary revision,” Boussour wrote.

Additionally, the BLS will revise the household survey data (one of two surveys that make up the jobs report) to account for new population estimates. Those could skew month-over-month comparisons for some of the labor force data.

Fed Chair Jerome Powell said Wednesday the US economy has yet to achieve a soft landing, noting that “we still have a ways to go.”

“We have not achieved a soft landing yet,” Powell said in his post-meeting press conference Wednesday, referring to a scenario in which the economy defeats inflation without triggering a recession and high unemployment.

“Certainly, I’m encouraged — and we’re encouraged — by the progress, but we’re not declaring victory at all at this point,” he said. 

Although the US economic recovery has far outpaced that of other advanced economies, Powell said there are still several metrics yet to meet the mandate for a soft landing.

Specifically, Powell touched on the following:

Overall, “it’s a pretty good picture,” he said.

Headlines have been dominated recently by large-scale layoffs at tech, media and transportation firms.

That’s creating some heartburn as to whether these are signs of broader instability in the labor market.

But for now, they appear to be fairly siloed, said Daniel Zhao, lead economist at employment review and job search site Glassdoor.

The technology layoffs appear to be an extension of the “year of efficiency” mantra from last year, Zhao said, adding that these companies appear to be streamlining rather than acting out of a place where they’re no longer financially viable.

“Some of these layoffs that are more about streamlining and getting more efficient aren’t necessarily a risk for spilling over into the broader economy,” he said.

The data tends to agree: Through December, the monthly number of layoffs and the rate of layoffs as a percentage of total employment remain well below pre-pandemic averages, according to BLS’ Job Openings and Labor Turnover Survey (JOLTS) data updated earlier this week.

Also, Worker Adjustment and Retraining Notification Act filings — federally required notices of impending mass layoffs or plant closures — haven’t picked up on a year-over-year basis, Wells Fargo’s House said.

“Those have slowed a little bit, signaling that we’re not about to see an imminent pickup in layoffs unless you really see a sharp deterioration in demand,” she said.

Still, businesses are having to be more disciplined in terms of their headcount amid changing labor market dynamics; specifically, far fewer people are quitting, she said.

Workers are voluntarily leaving their jobs at the lowest rate since the fall of 2020, JOLTS data shows. The hiring frenzy of recent years has leveled out, and there are fewer open jobs; plus, job-switchers have less of a financial incentive now: Their median annual pay gain in January was 7.2%, the lowest since May 2021, according to payroll processor ADP.

Unemployment claims — a gauge of layoff activity — remain below what was seen before the pandemic; however, they increased more than expected last week, according to data released by the Bureau of Labor Statistics on Thursday.

First-time jobless claims increased by 9,000 to 224,000 for the week that ended on January 27. Continuing claims, which are filed by people who have received benefits for at least one week, grew by 70,000 filings to 1.898 million — the highest they’ve been since mid-November of last year.

Rising continuing claims can indicate that it’s getting harder for unemployed people to find jobs.

The monthly jobs reports are a gold mine for economists with a plethora of new data to slice and dice for weeks. But the average person might assume there’s nothing useful in it for them.

That’s most definitely not the case, especially if you’re searching for a new job.

The report is essentially a monthly check-up on how the jobs market is doing. It includes details on where hiring is happening the most by industry as well as what you could expect to earn on average working in a given industry. You can also find details on average wages by education level, gender, race and more.

The report goes even deeper than that. For each industry studied in the report, there are also multiple subcategories. For instance, within leisure and hospitality, there are subcategories for jobs at performing arts centers, museums and bars and restaurants.

Knowing where hiring is and isn’t happening could help you fine-tune your job search, and may even help explain why you aren’t seeing a lot of job postings for particular roles.

For example, in last month’s jobs report a huge chunk of the hiring came from government jobs, more specifically local government, which includes teachers.

US-based employers announced 82,307 job cuts in January, a 20% decline from the 102,943 cuts announced in January the year before, according to a Challenger, Gray & Christmas report released early Thursday.

However, excluding January 2023, last month’s job cuts were the highest seen in January since 2009, according to Challenger.

“As we step into 2024, the landscape is shaped by stabilizing prices and the anticipation of falling interest rates; it is also an election year, and companies begin to plan for potential policy changes that may impact their industries,” Andrew Challenger, senior vice president of the outplacement and research firm, said in a statement. “However, these layoffs are also driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs.”

The biggest reason cited for last months’ job cuts was “restructuring” (28,329), followed by “closing” (14,555) and market/economic conditions (7,559). Artificial intelligence was cited as the reason behind 381 cuts last month, according to the report.

What happens with the economy in 2024 could depend largely on the labor market and what the Federal Reserve does with interest rates, according to Jack Kleinhenz, chief economist at the National Retail Federation.

“Federal Reserve officials have tough policy choices ahead as they decide on what to do and when,” Kleinhenz said in a statement released Thursday. “There is still a risk that keeping rates too high could curb the economy’s momentum more than necessary. Yet if they lower rates too soon, it could allow the economy to re-inflate and make it harder to contain inflation pressures.”

“I remain of the view that consumer spending will continue to grow, but at a rate slightly below overall GDP growth,” Kleinhenz said.

“Consumers were in decent shape heading into the holiday season, but the labor markets, while unlikely to unravel, do look likely to cool, which would impact consumer expectations and, in turn, affect spending decisions,” he said.

Consumer sentiment is at its highest level since July 2021 as shoppers feel more optimistic about the job market, the overall economy and their household finances.