(Boston, MA) Jan. 6, 2023 – The Bureau of Labor Statistics Employment Situation Report shows the labor market is still historically tight, with unemployment falling to 3.5% and labor force participation rising to 62.3%. Our economists broke down the jobs report this morning on LinkedIn Live, which you can view here.
Key Takeaways:
1. Slowing the labor market, as the Federal Reserve is trying to do to control inflation, won’t be so easy. Workers are still scarce, consumers still have money, and demand remains robust. Wage growth slowed, but still increased (up 9 cents per hour in December compared to 19 cents in November).
“There’s a fundamental misunderstanding of just what a tight labor market does to an economy. People still have a lot of money. If you have money, you spend money, and spending money keeps an economy going.” – Lightcast Senior Economist Ron Hetrick.
2. The unemployment rate edged down to 3.5%, after remaining steady at 3.7% in October and November. The unemployment rate has remained in a record-low zone from 3.5% to 3.7% since March 2022.
“The shocking thing to me is that the unemployment rate came down. The labor market is incredibly strong, surpassing everyone’s expectations. From the point of view of the Fed, this is the wrong direction.” – Lightcast Senior Economist Rucha Vankudre.
“The labor force experienced a big bounce back as a couple hundred thousand people came back into the job market from the sidelines. We’re seeing a reverse trend of workers staying out of the labor force. Now they’ve come back to the labor force and were all able to get jobs. It brings forth the realization of just how many jobs we created for people.” – Lightcast Senior Economist Ron Hetrick.
3. Is there something for everyone in this report? In normal times, this report would be heralded as good news for the economy. The only difficult news is for the Fed and their fight against rising inflation. Even so, the slowing growth of hourly wages should offer the Fed hope.
“Everyone is talking about the Fed trying to break the labor market. We need to remember that’s not actually the goal. Breaking the labor market would be bad for everyone. We’re trying to cool it off, slow it down.” – Lightcast Senior Economist Rucha Vankudre.
“To a person who just came in and saw these numbers and hadn’t heard the news reports over the past few months, they would say this is an outstanding report.” – Lightcast Senior Economist Ron Hetrick.
Charts:
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Press contact: Scott Bittle
Email: media@lightcast.io