Today’s release of the U.S. Labor Department’s statistic for the month of February marked good news for stock holders as 236,000 new jobs were added to the U.S. economy. As it stands, the unemployment rate fell to 7.7 percent, its lowest figures in over four years.
Although not quite low enough to urge the Federal Reserve to drop interest rates to further stimulate the housing market crippled after the recession, the number of jobs added is above what economists predicted. “The recovery is gathering momentum,” noted Paul Ashworth, chief economist at Capital Economics.
The job report is good for the stock market because it improves investor confidence in various companies. Simply put, the more people are working, the more likely they are to spend money, and raise the price of stocks. “There’s tremendous momentum in the market right now,” added chief derivatives strategist of TDAmeritrade, JJ Kinahan.
This week the stock market hit a record high, with the Dow Jones surpassing 2007’s milestone of 14,164, by closing out at 14,253.77.
Even with the positive outlook there are still factors that could drag the economy back down, like budget cuts brought on by the sequester. “Any job creation is positive news, but the fact is unemployment in America is still way above the levels the Obama White House projected when the trillion-dollar stimulus spending bill was enacted, and the federal government’s ongoing spending binge has resulted in a debt that exceeds the size of our entire economy,” House Speaker John Boehner said in a statement earlier today.
Boehner’s views are similar to other members of the GOP who have put pressure on President Obama to come up with a budget agreeable to both sides. “We can accelerate this job creation if President Obama is willing to put together a serious budget, giving business more certainty and thus allowing them to hire more,” said Republican National Committee Chairman, Reince Priebus. “It’s time for President Obama and his party to join us in working to get more Americans back to work and securing a debt-free future for our children.”
On the contrary, President Obama’s Council of Economic Advisers, Alan Krueger, side-stepped blame, urging Congress go forward with a “sustainable Federal budget.”