US adds 254,000 jobs in September signaling a strong economy: CEI analysis

The US economy added 254,000 jobs in September, beating out economists’ predictions and indicating that the economy remains strong. While wages continue to rise and employers are still looking for skilled workers, markets are wary of the Federal Reserve’s treatment of the ongoing inflation problem.

CEI Senior Economist Ryan Young:

“The economy remains strong in the face of the media’s pessimistic bias. Average growth is 2 percent. We are at 3 percent. Any unemployment rate under 5 percent is good news. We’re at 4.1 percent. Despite this, more than half of people think we’re in a recession. That misperception needs to change.

“The same story holds true: a healthy economy was hit by a pandemic in 2020. People hunkered down, then the same healthy economy resumed course once people felt safe again. The post-pandemic inflation came from the federal government overdoing the stimulus spending and quadrupling the rate of money supply growth to help finance it. Economic fundamentals have been in good shape all along. 

“The Federal Reserve’s recent interest rate cuts do not deserve credit for today’s good employment news. Their actions have a lag time of about a year before they have any effect. 

“This is more evidence that the Fed pivoted to stimulus mode too soon and should remain focused on keeping inflation in check. That job is still not done, largely because the Fed is so eager to stimulate that markets don’t trust it to stay disciplined and expect inflation to continue.”

CEI Research Fellow Sean Higgins:

“Friday’s report that the economy added 254,000 jobs in September, well above the forecasts and nudging the official unemployment rate downward marginally to 4.1 percent, indicates that employers are still looking for workers and willing to pay a premium for them. Wages went up by 13 cents in September and are up by 4 percent over the year, putting them ahead of inflation: The Consumer Price Index is up by 2.5 percent over the last year.

“Employers have done what they can to get by with fewer workers through automation and restructuring their business practices but there remains no substitute for a pair of human hands and an actual brain. Workers, meanwhile, have become more willing to moderate their job demands. There are 4.6 million people working only part time for economic reasons, up from 4.1 million last year.

“That said, the surprisingly high number of new jobs suggests that data should be taken with a grain of salt. The Labor Department has had to revise its data on occasion in recent months, such as August’s announcement that 818,000 fewer jobs were created between March 2023 and March 2024 than it previously reported. The department is struggling to keep track of a rapidly changing economy and that should be considered when viewing these numbers.”