For the year, the unemployment rate hovers near a 50-year low. Job openings are at record highs, and a growing number of workers are quitting, a sign of confidence in the hiring outlook.
The Labor Department released its official hiring and unemployment figures for December on Friday morning, offering the latest picture of the U.S. economy.
■ 312,000 jobs were added last month. Wall Street analysts had anticipated an increase of about 180,000.
■ The unemployment rate rose to 3.9 percent. November’s jobless rate was 3.7 percent.
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■ The average hourly wage rose by 3.2 percent from a year earlier.
In the past couple of months, as stocks swayed and concern over the prospect of a recession ensued, the labor market was relatively steady. Sure, the job numbers in November were softer than in previous months, but that is to be expected this late in a recovery.
Overall, employers added more jobs in 2018 than they did over the same period in 2017. But last year was unique, because Congress passed a big corporate tax cut that essentially bathed a sizzling economy in lighter fluid. Optimism among consumers and businesses soared. Manufacturers and builders kept hiring despite trade tensions and a slowdown in the housing market.
“People got used to these eye-popping job-growth numbers,” said Martha Gimbel, director of research for the job-search site Indeed. Even if hiring slows in the coming months, she said, “it doesn’t mean that anything’s wrong, it just means we are heading back to normal.”
Making Sense of the Tumultuous Markets
Even the best jobs numbers may not soothe investors.
“When market sentiment has gotten this negative, investors aren’t going to take one single data point and say: ‘Oh, we were wrong! Things are just fine,’” said Ellen Zentner, chief U.S. economist at Morgan Stanley.
Markets can sink into pessimism much more quickly than they rise out of it, Zentner said.
Each month’s figures are revised twice, and even a rosy snapshot captures the past, not the future. Wall Street reacted badly Thursday to the release of the Institute for Supply Management’s monthly survey, which showed the biggest drop in manufacturing activity since 2008. (The index reading of 54.1 still showed an economy in expansion.) Measures of consumer and business confidence have also weakened recently.
Economists are not particularly troubled by that softening. They see it as a natural signal that the economy will grow more gradually this year. But investors have to weigh that interpretation — that the economy is peacefully drifting toward less exciting times — against the possibility that it is reeling toward calamity. It hasn’t helped the mood of investors (or President Donald Trump) that the Federal Reserve decided to raise its target lending rate four times in 2018.
Wall Street, of course, has the potential to create the bad news it seems to be anticipating. Consumers are much more likely to own homes than stocks. But concern over withering retirement funds could prompt Americans to tamp down on spending. And business owners might start to pull back on investments. The combination could eventually chip away at economic growth.
“There can be a vicious feedback loop, whereby markets can become self-fulfilling prophecies,” Zentner said.
‘A Banner Year’
The unemployment rate hovers near a 50-year nadir. Job openings are at record highs, and a growing number of workers are quitting, a sign of confidence in the hiring outlook.
Even wages, which for months only inched up, have begun to pick up more quickly. The recovery has gone on for so long that it has finally begun to lift the lowest-paid workers, who have seen the biggest gains, and African Americans, whose jobless rate has reached record lows.
“2018 was a banner year for the labor market,” said Julia Pollak, a labor economist at the online employment market site ZipRecruiter.
And while it’s hard to imagine the jobless rate dipping much lower, there are still Americans who either do not have jobs or are not clocking as many hours as they would like. The share of people have part-time positions but would prefer to work full time is higher today than it was in 2007.
And a far smaller share of the U.S. 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 still have room to grow,” Pollak said. “We are not yet at maximum employment.”
The Shadow of the Trade War
Global growth is slowing. The Trump administration is waging a trade war with China. And Wednesday, Apple cut its revenue forecast for the first time in 16 years, citing flagging iPhone sales in China.
On Thursday, Kevin Hassett, the chairman of the White House Council of Economic Advisers, said on CNN that Apple would not be the only victim of tensions with Beijing.
“There are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China,” Hassett told the network.
Trump has indicated that he would like to cut a deal with Beijing, and the market turmoil, along with Apple’s announcement, may add to the pressure to end the dispute.