Schmid: Monetary Policy and the Economic Outlook

Total nonfarm payroll employment rose by 130,000 in January, and the unemployment rate changed little at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, social assistance, and construction, while federal government and financial activities lost jobs. This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry. For more information about the concepts and statistical methodology used in these two surveys, see the Technical Note. U.S. payrolls rose by 130,000 in January, more than expected; unemployment rate at 4.3% Job growth was stronger than expected to start 2026, providing some relief to concerns about the state of the U.S. labor market. Nonfarm payrolls increased by 130,000 for January, above the Dow Jones consensus estimate for 55,000, according to seasonally adjusted figures the Bureau of Labor Statistics released Wednesday. The total also was an improvement over December, which saw a gain of 48,000 after a slight downward revision. The unemployment rate edged lower to 4.3%, below the forecast to stay unchanged at 4.4% from the prior month. The report, delayed nearly a week by the partial government shutdown that ended Feb. 3, held consistent with a US LABOR DEPARTMENT PAYROLLS BENCHMARK REVISIONS: THE SEASONALLY ADJUSTED NONFARM EMPLOYMENT LEVEL FOR MARCH 2025 WAS REVISED DOWNWARD BY 898,000 ... THE JOBS STORY JUST GOT REWRITTEN On February 11, 2026, the Bureau of Labor Statistics slashed its 2025 payroll numbers in its annual benchmark update. What changed: Total job growth was revised from +584,000 to +181,000. That’s an average of just +15,000 jobs per month, not…

FED'S HAMMACK: GOOD FOR THE FED TO STAY ON HOLD RIGHT NOW, DOESN'T NEED TO FINE-TUNE RATE POLICY. ... Fed's Hammack: I don't think rates putting much restraint on the economy. FED’S HAMMACK SAYS U.S. GOVERNMENT DEBT IS ON AN UNSUSTAINABLE PATH AND MUST BE ADDRESSED

Federal Reserve official, President and CEO of the Federal Reserve Bank of Cleveland, Beth Hammack reiterated a steady but firm message, signalling little shift in the central bank’s stance as policymakers weigh the next move in rates. Hammack said the unemployment rate appears to be stabilising and characterised the labour market as broadly in balance, with the latest data reinforcing that view. The comments suggest the Fed sees limited immediate risk of labour market deterioration, reducing urgency for rate cuts on employment grounds. At the same time, she stressed inflation remains too high and emphasised the importance of returning price growth to the Fed’s 2% target. The tone underscores that policymakers are not yet convinced inflation pressures have been fully tamed. Hammack also noted that consumer spending continues to hold up, driven disproportionately by higher-income households. That dynamic may help explain why overall demand has remained resilient despite restrictive policy settings. Taken together, the remarks point to a Federal Reserve that is comfortable with current labour market conditions but not prepared to declare victory on inflation. The message aligns with other recent commentary from Fed officials that policy needs to remain sufficiently restrictive until inflation is firmly on a sustainable path back to target. FED’S HAMMACK SAID THE LABOR MARKET APPEARS BROADLY IN BALANCE WITH A STABILIZING UNEMPLOYMENT RATE, BUT STRESSED INFLATION REMAINS TOO HIGH AND MUST RETURN TO THE 2% TARGET.