May jobs surge signals resilience

NEW YORK (Gray Media) - A stronger-than-expected May jobs report points to a resilient U.S. economy, but it’s also adding uncertainty about what the Federal Reserve will do next on interest rates.

The Bureau of Labor Statistics says the economy added 172,000 jobs in May — well above forecasts that had expected roughly half that. The unemployment rate held at 4.3%, while wages rose 0.3% month over month.

The upbeat hiring picture comes even as the U.S. faces economic ripple effects from the war in Iran. Still, with inflation running above the Fed’s target, attention is shifting from the labor market’s strength to the central bank’s next policy move.

The Fed’s dual mandate is to support maximum employment while bringing inflation down to 2%. While the job market remains solid, inflation is still elevated — 3.8% in April — and is forecast to rise, raising the possibility that the Fed could keep rates higher for longer, or even consider an additional hike, rather than a cut in the months ahead.

Higher prices are already being felt in everyday costs, including gasoline.

“The gas price story is a serious one, we understand that people are hurting on that,” said Kevin Hassett, President Trump’s Director of the National Economic Council. “We’ve taken a number of measures to reduce the disruption and expect it to be temporary.”

The politics around the Fed remain intense. President Trump repeatedly criticized former Fed Chair Jerome Powell for not cutting rates over the past year. Now, the president’s hand-selected chair Kevin Warsh faces his first major test at the Fed’s policy meeting June 16–17.