December jobs report comes in roaring like a lion

The December Jobs report released on Friday practically leapt off the monitors, and onto the laps of waiting officials, and newsmakers, with the trumpets blaring that there were 312,000 non-farm jobs gained, when there were only expectations of 180,000, and the unemployment rate was 3.9, up from 3.7, on the household side.

Some optimists have noted, that wages are on the “higher side of a moderate to moderate pace,” but that might be more than a glass full.

That was only one voice, as others said, “Hey, hold on, not so fast that banner rate of 3.9 percent unemployment is OK,, but not that much better than November, and besides, everyone knows that the household survey is more accurate, and that is just a tad over 7 percent.”

Another voice in the crowd says, “Well that’s all good, but even better is that these numbers represent real employment, and after all, isn’t that what we’re all about Alfie?”

Bringing up the rear was this: “I don’t want to take all of the joy out of America’s hearts, but what about wages? That 3.2, is only a paltry increase. Show me the money, and then we can talk!”

From the Rose Garden of the White House, President Trump exclaimed, ““312,000 jobs was a tremendous number and obviously having a big impact on the stock market today,” he said, adding that the pickup in wage growth was “beautiful to watch.”

The hardnosed truth is that all of these voices are present, and while real wages, are not what they need to be, or even should be, it’s better than previous months, is the best said.

Cheering on the news was Fed Chair Jerome Powell, who noted that the Fed would not move quickly to raise rates unlike last tear.

Not to be outdone, but joining the Hallelujah Chorus was the usual cast of bankers and economist, and here is a small, yet sturdy, selection of comments culled from The New York Times.

“It’s an unequivocally phenomenal report all the way around,” said Ellen Zentner, chief United States economist at Morgan Stanley. “Anyone that finds something negative in this report is simply cherry picking.”

Economists offered raves that could appear on a movie poster or a book jacket — “Extraordinary!” “Blowout,” “Wow!” The figures, they said, offer a resounding response to the question of whether a recession is imminent: “Never mind!” said David Berson, chief economist of Nationwide. “The fears of the economy tipping into a recession now have clearly been overstated.”

Wages, as previously noted, are still a problem, for many, yet the report gave hope to many, but as we have noted in previous months, with the banner number this high, there should be higher wages, at least hitting 4 percent, or higher. The reasons, why we are not seeing them, is due to a number of factors: the mega employers, like Amazon are depressing wages with their global eight; employers are still seeing a lack of the right skill set, for the jobs that need to fill; and, higher wages are being given to those who change jobs, and have the right skills, but those that remain are being paid the same old wages.

The gap between education and experience has continued unabated, and that gap is particularly vexing to “the finance and insurance industries [who] are the most apt to see education and training as the largest impediments to hiring: 63 percent single this out as the primary reason.”

“In December, private sector workers (excluding farmworkers) got an average 11-cent hourly raise, adding up to an average hourly pay of $27.48. That’s a tiny bump, and reflects more of the slow wage growth that has plagued the economy in recent years. In the past 12 months, average hourly earnings have only increased 84 cents, or 3.2 percent, and that doesn’t even take inflation into account,” noted Vox.com.

“Wages, which for months only inched up, have begun to pick up more quickly. December’s year-over-year increase hit 3.2 percent, tying October for the biggest surge since 2009”, noted the Times.

Let’s go even further, as the good folks at Vox, said, “Over the past year, prices rose, so paychecks had to stretch further. When the 2.2 percent inflation rate is taken into account (based on the Consumer Price Index), workers’ wages only grew about 1 percent within the past year.”

“The price index for personal-consumption expenditures, the Federal Reserve’s preferred inflation gauge, rose 1.8% from a year earlier in November, the latest month for which data is available,” noted the Wall Street Journal.

They also noted that “the recovery has gone on for so long that it has finally begun to benefit the lowest-paid workers, who have seen the biggest pay gains.”  But, then that is not news, we have seen that for the last two months, and while this is helpful, it does not define the market.

A significant bright spot, continuing from August, is the increase in hiring for job seekers with only a secondary education. And some employers are decreasing requirements, overlooking lesser marijuana convictions, and even giving employees greater control over their schedule, as a further hiring incentive.

Overall, it will be hard to try and define the market, and while some are giving laud, others are taking a cautionary note, for example: "When we look at the job market, it's a bit of a counterpoint to the tremendous amount of volatility we see elsewhere in the economy, and essentially in society," Bankrate.com senior economic analyst Mark Hamrick tells CNBC Make It.

He adds that while the current jobs report does provide some measure of comfort, job seekers should be mindful of a possible hiring slowdown due to risk factors like rising interest rates, trade war tensions and a low stock market.”

Weighing opportunity and risk may be the best effort for workers, and check bank reserves and keep a constant network for that rainy day that might be around the corner.

What is not around the corner is the resignation of Jay Powell, the Fed Chair, that has been under so much fire and vitriol from President Trump, who has publicly criticized him. He told reporters, when asked whether he would resign if Trump asked him to, Mr. Powell simply said, “No.”

“Wall Street’s enthusiastic response to the jobs numbers was magnified by Mr. Powell’s comments. The S&P 500 index closed up more than 3 percent,” which was gleefully reported, again, by the Times.

“Powell’s statement that he’s willing to adjust central bank policy, if needed, represents a step back from a dogmatic determination to raise interest rates and is a concession to financial markets, said Andrew Brenner, head of global fixed income at Nat Alliance Securities.”

“We will be prepared to adjust policy quickly and flexibly and use all of our tools to support the economy should that be appropriate,” Mr. Powell said in response to recent volatility that has jolted financial markets.

“He’s blinking, big time,” Mr. Brenner said.

On the global side, China is facing an economic downturn, which can dampen trade, and its existing tariff war with Washington doesn't help; and the U.S. auto industry faces a possible downturn with the advent of driverless vehicles, and demand for electric cars.

Taking a cue from the Cassandras of a few months ago, “On Thursday, the Institute for Supply Management released a survey showing the biggest drop in manufacturing activity since 2008. Many manufacturers blamed rising costs related to tariffs. (The index reading of 54.1 still showed an economy in expansion.) Measures of consumer confidence have also weakened recently.”

Underemployment is still a factor and the share of people who have part-time positions but would prefer to work full time is higher today than it was in 2007, before the Great Recession.

Labor force participation is continuing a downward slide, “a far smaller share of the American population is working today than before the recession. That decline is partly because of the aging of the baby boom generation. But even among people in their prime working years, employment is down from before the recession, and far below its peak at the height of the dot-com boom.”

We noted last month that there is also a gender gap, with more women working, than men and some observers, wondering what is needed to get men off the sidelines. But, wages are a part of the problem, and some, though not all women, are either working part-time to supplement the family balance sheet, or accepting lower pay.