On The Money — 5 takeaways from a surprisingly strong jobs report

The U.S. economy surpasses Wall Street expectations with the recent jobs report. We’ll also look at some of the hurdles House Republicans face in trying to unify as the party works to hash out a cost-cutting budget strategy, the conference’s newest group targeting ESG investing, and more. 

🎈 But first, why is everyone talking about a Chinese balloon? 

Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.

Takeaways from a strong jobs report 

The U.S. economy added 517,000 jobs in January, more than doubling Wall Street expectations and turning up its nose at prognosticators of an imminent recession.  

The unemployment rate dropped to 3.4 percent, the lowest level since 1969. Analysts were expecting it to move in the opposite direction, ticking up to 3.6 percent.  

• The monthly jobs gain of 517,000 tops the average monthly gain of 401,000 for 2022, a year that already had strong job growth as the economy continued its recovery from the coronavirus pandemic.  
  
• Further revisions by the Labor Department showed that the economy added a half million more jobs in 2022 than previously recorded.  

“Yes, this is still mostly pandemic/recession recovery, but it’s an extremely rapid pace of growth even for a recovery,” said University of Central Arkansas economist Jeremy Horpedahl.  

Analysts are stunned: The consensus economist forecast pegged January job growth at 186,000, leaving some to wonder whether the figure will be revised down in the future. 

Tobias Burns has the story here.

Check out more coverage on the stunning jobs data: 

• The jobs report provides a pre-State of the Union boost to President Biden 
   
• These industries were the driving force behind the massive jobs gain
  
  

WHAT TO CUT?

House GOP struggles to unify over budget ideas 

House Republicans are struggling to unify as the party tries to hash out a cost-cutting budget strategy, creating headaches for Speaker Kevin McCarthy (R-Calif.) as he launches high-stakes talks with President Biden over raising the debt limit.  

Republicans charged into the year newly energized with their House majority, and all factions of the conference say they want to take concrete steps to rein in federal spending. But that’s about where the agreement ends.  

• Defense hawks are fighting to maintain — or even increase — military spending, putting pressure on GOP leaders to slash other domestic programs, including the major entitlements. And moderate Republicans are wary of cutting Medicare and Social Security, shifting pressure back on the Pentagon and other discretionary programs. 
  
• The clashing priorities have forced GOP leaders into a high-gear campaign to iron out the internal differences and rally the disparate groups into a unified front as the negotiations with Biden and the Democrats begin to heat up. 
  
• McCarthy, as a concession to conservatives who initially opposed his Speakership bid, had promised a budget that would eliminate all deficit spending within a decade, beginning with the effort to reduce 2024 discretionary spending to 2022 levels. And conservatives are ready to hold him to his promise. 

Aris and The Hill’s Mike Lillis have more here. 

ESG fight

Republicans launch group to combat ‘threat’ posed by ESG investing 

House Republicans are creating a new working group to further their pushback against environmental, social and governance investing, known as ESG.  

A press release from the House Financial Services Committee announcing the group said it will be aimed at combating what they described as a “threat to our capital markets.” 

• It will seek to “develop a comprehensive approach” to the ESG issue and “hold Biden’s rogue regulators accountable,” Financial Services Committee Chairman Patrick McHenry (R-N.C.) said in the release. 
  
• The GOP has been widely expected to take on the issue with their new House majority, with McHenry previously telling The Hill that his committee will “work together to conduct appropriate oversight of activist regulators and market participants who have an outsized impact.” 

The Hill’s Rachel Frazin takes it from here.

EXTRA CREDITS

Treasury Department expands definition of SUVs eligible for electric vehicle tax credit  

The Biden administration will expand eligibility for an Inflation Reduction Act-enabled tax cut for electric vehicles, the Treasury Department announced Friday.  

• The department has updated the standards used to determine eligibility, expanding the definition of an SUV. The $7,500 tax credit applies to SUVs costing up to $80,000, but there is no such benefit for passenger cars more expensive than $55,000.  
  
• Tesla’s five-seat Model Y, the Volkswagen ID.4 and General Motors’s Cadillac Lyriq will all be allowed under the $80,000 price cap as crossover SUVs.  

Zack Budryk has more here. 

Good to Know

The chief operating officer of Southwest Airlines is scheduled to testify next week before the Senate Commerce, Transportation and Space Committee after the airline struggled with technical problems that caused it to delay and cancel thousands of flights in December.   

Other items we’re keeping an eye on: 

• Ford Motor Co. announced that the company fell short of its expectations in the fourth quarter and last year, reporting that it lost $2 billion in profits. 
  
• Senate Democrats are giving marijuana banking legislation another look only weeks after it hit a wall with Republicans and was not attached to a year-end spending package. 
  
  

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.