Surprise abounded in the latest “blowout” payrolls report: The U.S. economy exceeded job-growth expectations in January, wages increased above forecast, and unemployment fell lower than predicted.

At-a-glance highlights

Key takeaways from the latest U.S. Bureau of Labor Statistics report¹ include:

• Jobs increased by 353,000 in January, nearly double the expectation of 185,000.²
• Growth spanned industries, led by professional and business services with 74,000, as well as healthcare (70,000) and retail trade (45,000).
• The unemployment rate held steady at 3.7%, lower than the estimate of 3.8%.
• On a year-over-year basis, wages jumped 4.5%, well above the 4.1% forecast.

With earnings on the rise, six in 10 workers still believe their income isn’t keeping up with inflation and the cost of living, yet only 31% plan to ask for a raise this year, according to recent Empower research.

Another Empower study, focused on employees with a retirement plan, shows workers are worried about how macroeconomic factors impact their personal finances, with their top financial concerns including:

• Inflation (90%)
• Possibility of a recession (81%)
• Rising interest rates and high prices (81%)
• Healthcare costs (81%)
• Market volatility (77%)

How jobs impact the economy

Some economists say the hot job market is powering a positive feedback loop: When workers have paychecks that beat out inflation, consumers can keep spending, in turn creating new jobs and more buying.

Indeed, consumer spending is a significant driver of the economy. In the fourth quarter of 2023, personal consumption expenditures racked up 68% of the nation’s Gross Domestic Product, or GDP, a core measure of the size of the U.S. economy.³

But the outlook isn’t all rosy: Other economists worry the strong January jobs report may prevent the Federal Reserve from slashing interest rates anytime soon. That’s because a tight labor market with competitive wages may prompt consumers to keep spending. Recent Empower research shows shoppers are staying active, with more than 2 in 5 (42%) of Americans shopping simply to treat themselves at least once a month, and 21% doing so at least once a week.