Shock and awe was the reaction to Friday’s jobs report for January from the US Department of Labor as the news of 517,000 non farm jobs spread across the media, and jaws dropped from the halls of academia to the mythical Main Street, as they tried to absorb the huge number, when only, at best 182,000 were expected, accompanied by a 3.4 unemployment rate, one not seen since 1969.
President Biden was ecstatic saying that his brand worked, and worked well, and gave a smidgen of the joy he will give in his State of the Union address on Feb. 7. This follows on the heels of many legislative sucesses in recent weeks, and will no doubt be a part of his announcement of his relection campaign.
As he stated, “I’m happy to report that the state of the union and the state of the economy is strong.”
There was however some wailing and nashing of teeth in the marbled corridors of the Federal Reserve building, where Chairman Jerome Powell, already struggling to battle inflation through a series of rate hikes, will see that the road is still uphill in efforts to tame prices, despite a glimmer of light with lower automobile prices, and gasoline.
Despite more jobs for Americans, and wages, there was a slight drop in consumer spending, with a transtion from spending on goods to services, as they tired of bread making machines at home, in favor of dining out, even beyond their geographic locals. But, for Powell this is not enough and the recent rate hike of a quarter of a percentage point to a target range of 4.5%, 4.75% may have further affect.
The nations employers in some areas have tried to mitigate any looming layoffs, and balance sheet deficits, by trimming benefits, as they also trimmed qualifications in some open slots to attract workers; and, that seems to be working, but only time can tell.
Powell did note that his efforts at “disinflation that we have seen so far has not come at the expense of a weaker labor market.”
When postioned against layoffs in the tech, finance, housing and media sectors Friday’s huge numbers seem to have unerved some economists, in this tight labor market. And, some including Lael Brainard, Vice Chair of the Federal Reserve, noted recently, that the calibrating efforts we’ve discussed in prior months, could swing too far, and a time lag may not show the consequnces of being too aggresive, till too late.
Ergo last week’s small increase from the Feds, the smallest in eleven months. Let caution be the path ahead, say many economists, versus the hole plugging that was seen last year.
What has hardly changed, ironically, is the rate of labor force particiaption, which has barely budged, and is currently at 62.4, showing the increasing willngness for many baby boomers to remain retired, not even transitoning to become Walmart greeters, wielding a yellow marker for customer reciepts.
For women there are still issues of child care, and in two person households, sacrifice may be the watchword. In the absence of government funded child care, this is a reality that must be embraced.
Nevertheless the US economy grew at 2.1 percent by the end of last year, and nearly all jobs lost to the Covid pandemic have been restored.
Of course, no picture of the nation’s economy would be complete without a discussion of wages, and that shows a moderation of 0.3 percent from December of 2022, and 4.4 percent over the course of 2022.
Taking a look at that growth, broadly speaking we can see 128,000 in leisure and hospitality, including bars and restaurants, with demands for meals and drinks have begun to return to normal pattern, as well as air travel, despite recent snafus with Southwestern Airlines and stranded passengers.
Local government employmnt, also improved, especailly on the state level as seen with the end of striking employees at the University of California schools.
Temporary workers got more assignments and their ranks swelled to 26,000.
Black employment steadied at 5.4 percent with a bump from Black women, but the gains were relative to the higher unemployment in that group, and taking a glance at the end of 2022, there was an increase among Black men of 5.3 percent, with women it was a decrease of 4.7 percent.
There has also been a seesaw efect with a decrease of 5.5 percent in Spetember of 2019, and in November of 101`, thee was a decrease for Black women of 5 percent, and now while there is praise for improvement, Black employment, overall, is higher when compared to whites, Asians and Hispanics.
Kate Bahn, director of labor market policy and chief econmist at the Washington Center of equitable Growth told CNBC that “Sometimes when folks see improvement, they see it as positve, but the disparities are stil there.
Let’s take a closer look at the elephant in the room, inflation, as fears continue, despite the absence of a recession, which many curiously want to see; but, as we see that some price increases were temporay, and that the effects of supply chain weakness has abated, along with the early energy and gas increases that have leveled of since the early days of the war in Ukraine.
Implict in some of the chair’s remarks is a desire for a soft landing, that some observers rejected last year, that incudes a mild recession, but optimists such as Aaron Sojouner told NPR, “Inflation has come down but there’s not a recession.”
While there is still a hard slog ahead, we can all be thankful for that.
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