The U.S. economy demonstrated resilience in May by adding 172,000 jobs, according to the Bureau of Labor Statistics. This growth comes amidst an energy and inflation crisis exacerbated by the ongoing conflict with Iran, which has significantly impacted gasoline prices.

Job Market Resilience

The unemployment rate remained steady at 4.3%, indicating a stable labor market. However, concerns are rising over wage growth not keeping pace with inflation. Average hourly earnings increased by 3.4% over the past year, marking the lowest growth since 2021. In contrast, inflation surged to 3.8% in April, primarily driven by a 40% increase in gasoline prices since the conflict began.

Jennifer Timmerman from Wells Fargo Investment Institute noted that this trend could lead to reduced consumer spending in the coming months. The Federal Reserve is expected to consider raising interest rates to curb inflation, with traders projecting a high likelihood of a rate hike by December.

Sector-Specific Growth

Significant job growth was observed in the education and healthcare sectors, which have been major contributors to the labor market’s gains over the past year. The leisure and hospitality industry also saw a notable increase, adding 70,000 jobs in May, far exceeding the average monthly gain of 14,000 over the previous year.

Conversely, the financial services sector lost 22,000 jobs, and the transportation and warehousing industry continued to decline, losing 92,000 jobs since its peak in February 2025.

Inflation and Economic Outlook

Fed officials have expressed concern over the trajectory of the economy, particularly with the 55% rise in diesel fuel prices affecting various industries. Beth Hammack, president of the Federal Reserve Bank of Cleveland, emphasized the need for policy action to address persistent inflation risks.

Additionally, Fed governor Lisa Cook highlighted potential inflationary pressures from significant investments in artificial intelligence, which have driven up the costs of data center equipment and technology components.

Despite these challenges, the White House remains optimistic, with Kevin Hassett, director of the National Economic Council, highlighting the positive momentum in hiring. The government will release the May inflation report next week, which will provide further insights into the economic landscape.

Original reporting: NBC4 Los Angeles — read the source article.