US adds 390,000 jobs in May despite fears of economic backslide

Your Money

(NewsNation) — America’s employers extended a hiring streak in May, adding 390,000 jobs amid skyrocketing inflation and mounting fears of a potential economic backslide.

The report Friday from the Labor Department showed that last month’s job growth kept the unemployment rate to 3.6%, the same rate as the prior two reports and the lowest level since the pandemic erupted two years ago. The solid hiring streak has bolstered an economy under pressure from high inflation and interest rates.

Last month’s gain reflects a still-healthy job market despite concerns that the economy will weaken in the coming months as the Federal Reserve steadily raises rates to fight inflation. 

The May jobs report coincides with inflation near a four-decade high and worries about higher borrowing rates and a potential recession roiling the stock market. Yet employers remain generally optimistic. Consumers have kept up their spending despite their intensifying concerns about higher prices.

Average paychecks are rising. And households, particularly higher-income ones, have amassed unusually large savings, boosted in part by relief payments from the government after the pandemic recession struck.

Even so, another solid month of hiring won’t likely help Democratic lawmakers, who face the prospect of losing seats in Congress this fall, with chronically high inflation at the top of voters’ concerns. President Joe Biden’s approval ratings have crumbled even as the unemployment rate has fallen. A recent NewsNation/ Decision Desk HQ poll found that more than 57% of registered voters surveyed disapprove of the way Biden has handled the presidency, with 40% saying they “strongly disapprove.”

American politics has entered an unusual period in which jobs and wages, which have long been the most influential economic metrics for everyday voters, have taken a back seat to the pain of inflation.

Inflation had begun surging last year as spiking demand for cars, furniture, electronic equipment and other physical goods collided with overwhelmed supply chains and parts shortages. More recently, prices for such services as airline tickets, hotel rooms and restaurant meals have jumped as Americans have shifted more of their spending to those areas.

The national average for a gallon of gas reached $4.72 Friday, a record high before adjusting for inflation, up 13% from just a month ago.

The Fed’s rapid rate hikes, which are on track to be the fastest in more than 30 years, could eventually weaken the economy. To try to cool spending and slow inflation, the central bank raised its short-term rate last month by a half-point, its biggest hike since 2000, to a range of 0.75% to 1%.

This story is developing. Refresh for updates.

The Associated Press contributed to this report.

© 1998 - 2022 Nexstar Media Inc. | All Rights Reserved.

Trending on NewsNation

Elections 2022

More Elections 2022