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Job Growth in US Cools Amid 40-Year High Inflation Headwinds Eroding Americans Paychecks

A sign advertises for help The Goldenrod, a popular restaurant and candy shop, Wednesday, June 1, 2022, in York Beach, Maine. (AP Photo/Robert F. Bukaty)

The Labor Department released its closely watched May jobs report Friday morning. 

It was better than some expected. But some analysts say it suggests that headwinds from the highest inflation in four decades, global supply chain issues, and increasing worker shortages are affecting the labor market. 

The U.S. added some 390,000 jobs in May for the 17th consecutive month of gains. But President Joe Biden explained he knows Americans are worried. 

"I know that even with today's good news a lot of Americans remain anxious, and I understand the feeling," he said. 

Though the lowest number of jobs added to the economy in a year, experts say it shows a resilient job market even amid concerns the economy will weaken in the coming months, as the Fed raises interest rates to fight inflation and Americans are feeling the strain of rising prices on all fronts. 

"There's no denying that high prices, particularly around gasoline and food are a real problem for people. But there's every reason for the American people to feel confident that we'll meet these challenges. Because of the enormous progress we've made on the economy," Biden said. 

Unemployment remains low at 3.6 percent for the third straight month. Average hourly earnings rose by 10 cents with more workers rejoining the labor force. But many industries remain desperate to hire amid record levels of consumer spending.   

Jobs growth was led by the leisure and hospitality sector as consumers continued to pivot their spending habits away from goods and toward services like travel, dining, and entertainment. 

"And American manufacturing is booming. We added 600,000 jobs since I took office," the president said. 

Though economists say this is a good report, some believe there are signs of big trouble ahead. 

"I'm worried about the future," said economist Steve Moore, chair of the Task Force on Economic Revival at FreedomWorks. "The problem right now is not jobs. It's the inflation that's killing and eroding people's paychecks." 

The Federal Reserve is also worried that rising labor costs will continue to be passed along to consumers, constraining efforts to bring down inflation, which is already at a 40-year high. 

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