Strong, steady, and resilient are some of the adjectives used to describe the U.S. economy in the recent December Jobs Report from the U.S. Dept. of Labor on Friday. It exceeded expectations with 216,000 non farm jobs, when 170,000 were expected, and whatever adjective those reading the report used, weak was not one of them.
Added to that figure was the unemployment rate of 3.7 and wages that showed an average hourly increase of 0.4 percent bringing a total of 4.1 percent and fueling the goods news was that despite inflation, these high wages allowed many people to say ahead of inflation, which reached 3.1 percent; and, consumer spending, the traditional driver of the American economy became the bellwether for December.
A grace note: those wages totaled 4.3 percent for 2023, “the third highest level since 2008,” said The Washington Post.
This report also put to rest those Cassandra-like predictions of recession that populated the national media, only to be slayed.
Reaching historic standards, the unemployment figure is the largest stretch that we have seen since the mid 1960s, noted The Hill in its coverage.
Notable, and not surprising, was the rejoicing from the Biden administration, as he ramps up his reelection bid for a second term in the White House, and to note 14 million jobs have been created on his watch.
While the term Bidenomics might not mean much to Joe, or Jane Average, higher wages to meet, and exceed inflationary prices do.
“Wages and consumer confidence are up, the economy is growing, and in 2024 President Biden and Democrats will keep working to lower costs and get working families more breathing room,” said House Budget Committee member Brendan Boyle (D.Pa) in a call to reporters.
Even as far back as October Rob Haworth, senior investment strategy director at U.S. Bank Wealth Management, told usbank.com that the increases he saw then was because “consumer spending remains strong, which is driving the surprising level of growth we’ve seen.”
Taking a closer look at the numbers we do see that labor force participation edged slightly downwards to 62.5 percent, from 62.8, with a total figure of 700.000, one that the Federal Reserve Board will be closely watching.
The winners were health care climbing to 38,000, government to 52,000, and retail to 17,000 giving a solid showing to the holiday season.
On the losing side was transportation and housing down to 23,000, attributable, in part to higher interest rates, and perhaps a pattern of vehicular sales tilted to SUVs rather than sedans.
Despite the good news, some economists noted that the total number of jobs for 2023 was 2.7 million, contrasted to the two prior years that surged after the pandemic, with gains in rehiring, but the records show that, 2015 excepting, these are still very strong numbers.
For Jerome Powell and the members of the Federal Reserve Board, the slowing of wages,coming down from those hot years, is welcome news. And, this concern is warranted since wages this healthy could lead to a broader spectrum pushing prices upward that might lead to another round of inflation
It is important to note, as is the custom, December's numbers will be revised, probably downward, and reflected in the January report.
Finally, the cut for interest rates, anticipated for March, will probably not be seen until May in a survey of many economists, given that Powell is known to be data driven.
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