November US Jobs Report singing the same tune

At the risk of sounding like a well-worn record, the November Jobs Report released by the US Labor Dept. on Friday is a repeat of prior months with its surge of jobs and employers scrambling to find the right talent, and willing to pay more to get them. 

The problem is that this pattern has steadied the ladder on inflation and increased the efforts of the Federal Reserve Bank to tamp down inflation with increased interest rates, and in what seems like an upward climb for them, it has replaced the earlier doom and gloom reports of recession.

Fridays numbers showed an increase of 263,000 non farm jobs, much higher than the expected 200,000 most economists predicted, and unemployment remains predictable at 3.7 percent, (which is also pushing up wages) against a background of an added jobs in 2022, according to The Hill, “more than it did in the economic boom years” up the Covid pandemic. In fact there have been “two open jobs for each unemployed American as recently as September according to Labor Dept. data.”

Increased earnings are another headache for the Fed, and Chairman Jerome Powell has noted as such, over the last few reports, and earnings increased by 0.6 percent in November and reached 5.1 percent for the past 12 months.

Backing into the detail, it was also reported, “The biggest news in this release is large upward revisions in wage growth for September and October and a big number for November,” Jason Furman, who chaired the White House Council of Economic Advisors (CEA) under former President Obama, said on Twitter.

“This is the second time this year we’ve seen [revisions] like this dashing the hopes that maybe nominal [wage] growth was cooling,” he continued.

Powell has noted “To be clear, strong wage growth is a good thing,” in remarks at The Brookings Institution, but cautioned, “But for wage growth to be sustainable, it needs to be consistent with 2 percent inflation, ”a mandate for the Fed, besides full employment.

He recently added this warning: they have “a long way to go” before inflation will fall back to pre-pandemic levels.

While the labor force participation rate has flatlined, it has also become a significant factor for employers to try and tease them from the sidelines with sign on bonuses, and such, but for many, especially women, lacking adequate childcare, they are forced to stay on those sidelines, along with those workers who took advantage of the Covid lockdown to evaluate their jobs, often moving away from jobs that require long hours on their feet, or in long distance transportation jobs.

There are some bright spots: leisure and hospitality with increases of 5.8 percent, and an increase with health care and hospitality. But, those were offset by losses in transportation and warehousing which dropped 15,000 jobs, and retail with a 30,000 job loss, totaling by 62,000 since August.

Retailers were also gearing up, by decreasing holiday hiring by some cautious employers, such as Macy’s and Walmart, fearing that customers were going to face higher prices, and spend less.

Money.com noted that, “Folks are expected to feel "sticker shock" when they go shopping for holiday gifts because prices have risen with inflation, says Andrew Flowers, a labor economist for recruitment advertising company Appcast. Companies are concerned Americans will react to these price hikes by spending less money, impacting their bottom lines and reducing the need for extra staff.

“Consumers are going to face a holiday season with higher prices,” Flowers says. “Inflation, and all the knock-off effects of inflation, are going to likely slow consumer spending this season, and whether it's retailers or warehouse employers, they are going to have to respond.”

There are others that see a brighter light with increased consumer spending, but they are in the minority, and with that spending as the main driver of the US economy, this is an area of concern.

Some sectors are shedding employees, said The Wall Street Journal, “with many growing nervous about the economic outlook,” as they see consumers transitioning from spending on goods to services; restaurants in particular. Some see a reduction than layoffs, noted Guy Berger, principal economist at LinkedIn.

Revisions to figures along with the household survey might show less hiring than payroll figures suggest, opined the Journal.

The reaction from the White House was jubilant, and President Biden said, “We continue to create jobs — lots of jobs,” he told reporters before signing a bill to avert a nationwide rail strike. “We’re in a situation where things are moving — moving in the right direction.”