WASHINGTON — An unforeseen burst of hiring last month has lifted hopes that the economy will prove durable once again, even as an array of threats lie ahead.
Friday's government report raised hopes for a notoriously difficult “soft landing,” by which the Federal Reserve would manage to curb high inflation with a series of rate hikes without derailing the economy. “I think that the American people are smart as hell and know what their interests are," Biden said."I think they know they’re better off financially than they were before.”The Fed has raised its benchmark short-term rate 11 times since last year to about 5.4%, the highest in 22 years — the fastest pace of rate hikes in four decades. The increases are intended to slow borrowing and spending by businesses and consumers, thereby cooling growth.
“We’ve seen a very impressive rebound in the labor supply,” said Sarah House, senior economist at Wells Fargo. “After a downturn, there’s a lot of consternation about to what extent workers will come back. And what we’ve seen is that workers do respond to a strong jobs market.” Such data underscores the tantalizing prospect that inflation could continue to ease — it was 3.7% in August — without requiring widespread layoffs or a recession, in what Austan Goolsbee, head of the Federal Reserve Bank of Chicago, calls “the golden path.” Some other Fed officials think the economy will have to cool to truly stamp out rising prices.