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The U.S. economy added 313,000 jobs in February. This is the largest monthly gain in nearly two years, and well above the average for this long recovery. In addition, the Labor Force Participation Rate increased to 63.0% (from 62.7%) as more than 800,000 joined the labor force during the month. Because of all those new workers in the labor force, the unemployment rate stayed the same at 4.1%. The economy has been adding jobs now for 104 straight months, nearly nine years.


In February, wage growth slowed from the more robust numbers of January, and the annual increase in wages from last February now stands at 2.6%. That same reading a month ago was 2.8%, a number which spooked the markets.


As more and more information rolled out about the administration’s tariff plan, investors worst fears seemed to ease and markets rallied. Originally, President Trump announced that no country would be spared the tariffs. That changed. Ultimately Canada and Mexico were spared, and there have been indications that other allies may be removed from the tariff list as well. As the markets had reacted negatively to the broader tariffs, this announcement that it would not be so broad caused stock prices to bounce back a bit. On Friday, the combination of strong new hiring numbers, a large number of Americans rejoining the workforce, and more muted wage growth numbers lead many to believe that perhaps inflation and interest rate growth will not grow at a rate that will harm the economic recovery and bull market.


To no one’s surprise, mortgage rates have risen lately according to data released by Freddie Mac. The average rate for a 30-year mortgage rose to 4.46% last week, the highest rate in four years and the ninth straight week of increases. At the start of the year, the average was 3.95%. These are still low rates by historical standards, but many new buyers have never known “normal” rates. Millennial buyers will experience some level of sticker shock, and it may slow down the housing market. It has already slowed down refinancing activity.



STRONG EMPLOYMENT ACTIVITY IN FEBRUARY: http://www.calculatedriskblog.com/2018/03/february-employment-report-313000-jobs.htmlhttps://www.wsj.com/articles/u-s-employers-added-313-000-jobs-in-february-unemployment-steady-1520602558
WAGE GROWTH WAS MUTED: http://www.calculatedriskblog.com/2018/03/comments-on-february-employment-report.html
MORTGAGE RATES RISE: https://www.wsj.com/articles/mortgage-rates-at-a-four-year-high-threaten-to-roil-housing-1520539554?mod=searchresults&page=1&pos=6