Blockbuster jobs report paves way for U.S. economy to avoid recession with a “soft landing,” experts say

A blockbuster jobs report on Friday paved the way for a soft landing in which inflation returns to normal levels as the U.S. economy averts a recession, experts told ABC News.

Employers added 254,000 workers last month, exceeding economists' expectations of 150,000 new jobs, data from the U.S. Bureau of Labor Statistics showed. The unemployment rate fell to 4.1%.

The labor market ended a months-long slowdown, erasing any lingering worries about an impending recession and easing pressure on the Federal Reserve to stimulate the economy by quickly cutting interest rates, experts said.

Instead, they added, the sound state of the economy allows the Fed to keep a close eye on inflation while continually lowering lending rates to maintain the solid labor market.

“A soft landing is in sight,” Elyse Ausenbaugh, head of investment strategy at JP Morgan Wealth Management, said in a statement to ABC News. “The bottom line here is that a robust labor market continues to support consumers and the Fed is cutting interest rates.”

Weaker-than-expected jobs data in July and August had raised concerns among some economists about the country's economic prospects. A significant rise in the country's unemployment rate had also been a concern, although the level remained near 50-year lows.

Two weeks ago, the Fed cut its key interest rate by half a percentage point, signaling a shift toward a greater focus on securing a strong labor market.

The new jobs data defied such worries by painting a rosy picture of the economy, where employers are hiring at a rapid pace, a large share of people are staying on the job and wages are rising quickly, analysts said.

“The huge upside surprise suggests that the labor market may actually be a picture of strength, not weakness,” Seema Shah, chief global strategist at Principal Asset Management, said in a statement to ABC News.

Meanwhile, inflation has slowed dramatically from a peak of about 9% in 2022, but is still slightly above the Fed's 2% target.

The combination of stable inflation and steady job growth represents a dramatic change from the economic uncertainty that hung over the economy three years ago. Back then, a red-hot job market and soaring inflation triggered the Fed's most aggressive series of rate hikes in decades.

The rise in interest rates sparked dire recession predictions from many economists, as high interest rates typically weigh on economic activity and cause companies to cut investment and lay off workers.

The economy has proven these predictions wrong. The economy has continued to grow. Although the job market slowed last year, it remained healthy, experts said.

“The jobs report should help ease investor concerns that the U.S. labor market is teetering on a cliff and threatening to drag the economy down with it,” Bret Kenwell, U.S. investment analyst at eToro, said in a statement ABC News.

“While a report doesn’t necessarily give investors the all-clear, it is a big step in the right direction,” Kenwell said.

Experts who spoke to ABC News said Friday's strength in the labor market is easing pressure on the Fed to accelerate its rate cuts and stimulate the economy. In return, experts assume that the Fed will cut interest rates by a quarter of a percentage point at the next central bank meeting in November.

“It shows they don’t really need to be in a rush right now,” said Ausenbaugh of JP Morgan Wealth Management.