US economy facing 'a lot of challenges right now': Labor Secretary Marty Walsh

Labor Secretary Marty Walsh acknowledged on Friday, shortly after the department’s "strong" monthly payroll report was released, that there are "a lot of challenges right now."

Walsh made the comment on "Varney & Co." reacting to the imbalance between wage growth and inflation. On Friday morning, the Labor Department revealed that average hourly earnings rose by 5.6% year-over-year in March, up from 5.1% the month before. But surging inflation – which hit a fresh 40-year high in February – has erased those would-be gains for workers. 

The consumer price index – which measures a bevy of goods ranging from gasoline and health care to groceries and rents – climbed 7.9% on an annual basis, according to data released last month by the Bureau of Labor Statistics. 

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"We have the [Russian President Vladimir] Putin price hike with oil and gas that we’re seeing across the country," he told host Stuart Varney, adding that there are still a lot of problems related to supply chains. 

"But the president’s plan right now, and what he’s working on with us and the country, is to bring the cost for consumers down, and this certainly is not going to be done overnight," Walsh continued. 

Varney then asked the labor secretary why President Biden does not "move heaven and earth to increase the production of natural gas and oil in the United States?"

"First and foremost we are producing more gas and oil in our country, but the issue is not that simple," Walsh responded. "We can’t produce enough of it to make up for the world supplies that have been cut back on. It’s just not logistically possible."

"And so [what] we have to do is continue to work on these issues as we continue to move forward here," he continued, noting that Biden is "certainly trying" to bring down inflation. 

The U.S. oil benchmark fell on Friday ahead of a meeting of consuming nations to discuss a new release of emergency oil reserves alongside the release announced by the United States. Brent crude, the international benchmark, was trading slightly higher on Friday afternoon.  

U.S. job growth continued at a brisk clip in March, suggesting the labor market is still strong as it confronts the highest inflation in four decades, global supply chain constraints, as Walsh noted, and new headwinds from the Russian war in Ukraine. 

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The Labor Department said in its monthly payroll report released Friday that payrolls in March rose by 431,000, missing the 480,000 jobs forecast by Refinitiv economists. The unemployment rate, which is calculated based on a separate survey, fell to 3.6%, the lowest level since February 2020. 

Job gains were broad-based, with the biggest increases in leisure and hospitality (112,000), professional and business services (102,000) and retail (49,000).

Businesses are eager to onboard new employees and are raising wages in order to attract workers as they confront a labor shortage. 

There are roughly 11.3 million open jobs – the third-highest on record – while the pace of layoffs has moderated in recent months. 

There are still about 1.6 million more out-of-work Americans than there were in February 2020, before the pandemic shut down broad swaths of the economy. 

Overall, Walsh said the report was "good" and noted that "since President Biden has taken office, 7.9 million jobs have been recovering."

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"We saw an uptick in labor participation, which is [a] really important number right now as we think about moving forward so we continue [to have] good reports into 2022," he continued, acknowledging that there is still more "work to do."

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FOX Business’ Megan Henney contributed to this report.