The US economy added 303,000 jobs last month, much more than expected.

The US job market is on fire.

• With 39 straight months of job growth, the U.S. is in the midst of the fifth-longest period of job growth in history.
• The 303,000 jobs created last month were about a third more than economists expected.
• The historically low 3.8% unemployment rate continues the longest period in which the U.S. unemployment rate has been below 4% in more than 50 years.

And yet…Americans continue to be fed up with the economy. In a February CNN poll, nearly half of those surveyed said they believed the economy was still in recession. Last week, a Wall Street Journal poll showed that Americans’ approval of the U.S. economy has fallen by 31 percentage points. This poses a major risk to President Joe Biden’s re-election campaign.

The reason is stubborn inflation. Although price increases have subsided dramatically over the past year, costs remain high. Gasoline prices posted on signs across towns, cities and highways are rising again, with the national average heading toward a six-month high of $3.60. Food prices remain frustratingly high, and even though the rise in overall food inflation has subsided, eating out still far outpaces overall inflation.

In the magazine’s poll, 74% of respondents said inflation over the past year has been heading in the wrong direction.

This is not an easy problem for the Fed to solve. Historically high interest rates weighed on the economy, with mortgage rates rising to nearly 7% and the housing market effectively frozen. Inflation has fallen from a 40-year high to near normal levels.

But Americans continue to spend, employers continue to hire, and costs persist even as inflation slows. So every time you go shopping and see a surprisingly large receipt, people are reminded of frustrating inflation and their view of the surprisingly strong U.S. economy worsens.