Fed chair says jobs report 'stronger' than expected

By Alicia Wallace, CNN

Federal Reserve Chairman Jerome Powell on Tuesday made his first public appearance since Friday’s scalding hot January jobs report.

Powell participated in a question-and-answer session with David Rubenstein of the Economic Club of Washington.

Powell is expected to discuss the current state of the US economy and the central bank’s actions in the battle to bring down historic inflation.

The US economy added 517,000 jobs in January, and the unemployment rate dropped to 3.4% — the lowest in more than 53 years, the Bureau of Labor Statistics reported on Friday. The jobs number was “stronger than anyone I know expected,” Powell acknowledged Tuesday.

Economists, on average, were expecting 185,000 job gains, which would have been the slowest pace of growth in more than two years, and for the jobless rate to increase to 3.6%.

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Is job market too hot?

And while economists say it was likely the January number was heavily influenced by seasonal factors and will be adjusted downward, it’s still likely too hot for the Fed’s liking, Joe Brusuelas, principal and chief economist for RSM US, told CNN Business last week.

“The job market is clearly too robust at this time to re-establish price stability; therefore, the Federal Reserve is going to have to not only hike by 25 basis points at its March meeting, it’s going to have to do so at the May meeting,” he predicted.

The robustness of the labor market has stood somewhat at odds with the Fed’s efforts to lower inflation.

A key reason Fed Chair Jerome Powell wants more slack in the labor market is out of concern that a tight employment situation will continue to push up wages, which could then keep inflation elevated. As the unemployment rate rises, workers lose bargaining power for higher wages and households pull back on spending.