5 takeaways from a stunning January jobs report | The Hill


Category:  News & Politics

Via:  jbb  •  4 weeks ago  •  23 comments

By:   Tobias Burns (The Hill)

5 takeaways from a stunning January jobs report | The Hill
Job growth soared past expectations in January and wages rose faster than inflation, exhibiting more strength at the start of an election year in which the economy could be a huge factor. The U.S. economy added 353,000 jobs last month, according to Labor Department data released Friday, about double what economists were expecting in different…

S E E D E D   C O N T E N T

by Tobias Burns - 02/02/24 11:55 AM ET

Job growth soared past expectations in January and wages rose faster than inflation, exhibiting more strength at the start of an election year in which the economy could be a huge factor.

The U.S. economy added 353,000 jobs last month, according to Labor Department data released Friday, about double what economists were expecting in different forecasts. The unemployment rate held steady at 3.7 percent.

Wages on nonfarm payrolls rose by 0.6 percent to $34.55, double the monthly pace of headline inflation in December.

Annual wage growth ticked up to 4.47 percent, still considerably higher than the 3.5-percent growth many economists think is in keeping with the Federal Reserve's 2-percent inflation target.

Upside surprises in the labor market have been a hallmark of the post-pandemic economy, and Friday's numbers from the Labor Department continue that trend.

Despite consistently strong hiring and wage growth, inflation in the consumer price index (CPI) has fallen from a high around 9 percent in 2022 to 3.3 percent in December.

Here are five big takeaways from the January jobs report.

The labor market shows little sign of cooling

The January jobs report indicates the labor market isn't cooling under the weight of Fed rate hikes as much as many economists had expected it to.

Substantial upward revisions for November and December are more evidence that interest rate increases by the Fed, which are designed to slow the economy in response to inflation, have done little to weaken the job market.

The December jobs gain was revised up to 333,000 from 216,000, and November job growth was revised to 182,000 from 173,000 as reported in January, adding 126,000 more jobs to 2023's gains.

"There is simply no way that 350,000 job gains in a month is consistent with a further cooling of the labor market. This elevates the risk that nominal wage growth will not fall back to levels consistent with reaching the inflation target on a sustained basis, particularly as the labor force participation rate refuses to rise any further," Brian Coulton, Fitch Ratings economist, wrote in a Friday commentary.

Fed rate cuts will likely be pushed back

The strength of the January labor market suggests to many market commentators that anticipated rate cuts by the Fed will be delayed.

"The dramatic upside surprise to both jobs and wage growth means that a March rate cut must be off the table now, and a May cut is also now potentially on ice," Seema Shah, strategist with Principal Asset Management, wrote in an analysis.

"Certainly, with this kind of number, the six or seven rate cuts that markets had been pricing in seems very offside," she wrote.

The January numbers also call into question the timing of the so-called "soft landing," in which the economy returns to steady growth without a serious recession or large increase in unemployment.

Some economists, including Treasury Secretary Janet Yellen, have said the soft landing has already arrived, while the International Monetary Fund has said it's just on the horizon.

The latest gross domestic product (GDP) report from the Commerce Department, which showed GDP rising at a 3.3 percent annualized rate in the fourth quarter after jumping 4.9 percent in the third quarter of 2023, further suggests the economy has not yet "landed."

More fuel for Biden's economy pitch against Trump

President Biden and former President Trump have feuded over the economic records as both pivot toward their likely rematch in November.

Trump, aware that a humming economy in 2024 could hurt his chances of reelection, has accused Fed Chair Jerome Powell of having political motivations for cutting interest rates and stimulating business activity.

"I think he's political," Trump said in an interview recorded before the jobs report was released with Fox Business Network's "Mornings with Maria."

Despite the recent spate of strong economic data, Trump has predicted the economy will crash within the next 12 months while also attempting to claim credit for a record-breaking stock market rally.

Biden has largely brushed aside the stock market's strong numbers to focus on robust job gains, falling inflation and rising real wages.

While Biden's economic approval rating has been low, recent polling shows that Americans' views of the economy are trending upward, with economic confidence indices from Gallup and Pew showing improvements across the past two months. Consumer sentiment has also shooting been shooting up, as measured by the University of Michigan.

Will Democrats keep up the pressure on the Fed to cut rates?

Democrats cheered on yet more higher-than-expected job growth Friday morning.

"Our economy continues to blow by expectations and propel us towards what naysayers claimed was impossible: an inclusive, sustainable recovery that didn't sacrifice paychecks for growth," Rep. Richard Neal (Mass.), top Democrat on the House Ways and Means Committee, boasted in a Friday statement.

But between the lines of Democrats' enthusiasm are questions about whether the economy is still hovering above its intended path toward more regular growth. A less ambiguous soft landing scenario, which would more easily allow for rate cuts and victory speeches, may be preferable for incumbent Democrats.

"Considering today's jobs report, particularly the higher-than-expected average hourly earnings, cutting rates prematurely in this economy could needlessly undermine the significant progress made on inflation," Ivan Gruhl, co-chief investment officer at Avantax, cautioned in a commentary.

However, progressive economists are still doubling down on interest rate cuts and hoping central bankers will heed the call.

"High interest rates will only slow our clean energy transition and put families in more debt. Chair Powell must change his tune and cut rates in March," Groundwork Collaborative research director Bilal Baydoun said in a Friday statement.

Recession fears recede further into the distance

The good news for Democrats is that recession fears seem even less warranted than they did earlier in the year.

A widely predicted recession in 2023, along with a surge in unemployment, failed to materialize, allowing Democrats to say boast of their economic record in the face of doubters.

"I was wrong about the slowdown and the recession. So was the entire forecasting fraternity," Larry Kudlow, director of the White House National Economic Council under Trump, said Thursday on Fox Business Network.

Most market commentators simply abandoned their recession calls after they failed to materialize. While others pushed them back into 2024, the January jobs report pushes them further into the distance.

"The long awaited recession was pushed back once again, with our economy adding an incredible 353,000 jobs in January," Ryan Detrick, a strategist at Carson Group, said in an analysis. "When the employment backdrop is this strong, you simply don't see a recession."


jrDiscussion - desc
Professor Principal
1  seeder  JBB    4 weeks ago

I ask, who could possibly not be happy about all this good economic new?


Split Personality
Professor Guide
1.1  Split Personality  replied to  JBB @1    4 weeks ago

I was a little surprised at the Hill, for the past few years they have published some questionable opinion pieces which made me think they were trending conservative.

MBFC says they are (still) the least biased...

The Hill - Bias and Credibility - Media Bias/Fact Check (mediabiasfactcheck.com)

The Heritage Foundation on the other hand is devoted to the Republican Party and the most negative look at any political topic.   They continue to use facts to argue undefendable positions, like the Biden Administration is preventing home ownership because the mortgage rates have risen to historically normal rates, a good indicator of a normally functioning economy.  The historically low and unsustainable mortgage rates of 2020 were a sign of a failing economy, we cannot return to rates like that yet it is a conservative theme that flies in the face of the banking industry.  Nor can we compare 2020 rates to any year as a sign of malfeasance by the President, the Fed or the banking industry.

Heritage Foundation - Bias and Credibility - Media Bias/Fact Check (mediabiasfactcheck.com)

Professor Quiet
2  Ronin2    4 weeks ago

A jobs reported that will be severely edited back down at the end of February to make the this month's jobs report look outstanding!

Part of the explanation for this bizarre divergence lies in the quiet revision process that has consistently downgraded the official data after the initial headline got all the attention. In short, the economy is not as strong as we’ve been led to believe.

Perhaps the most notorious example this year has been the jobs numbers published by the Biden administration. Consider the newly released August jobs report. While the economy   added   187,000 jobs last month, previous months were revised down by 110,000 jobs. That means 59% of the employment growth last month was jobs we thought we already had.

In fact, every monthly employment report this year has been revised down, meaning the economy has been adding fewer jobs than initially believed. Worse, the Bureau of Labor Statistics published its semiannual benchmark revisions showing jobs were overestimated by more than 300,000.

Between the downward adjustments for the monthly data and the semiannual benchmark, the number of jobs has been revised down by almost 700,000. That’s 30% of the jobs initially estimated to have been added this year. Adding insult to injury, government jobs were revised upward with the semiannual benchmark.

To be clear, jobs data are normally revised, and occasionally, several months in a row will be revised in the same direction, sometimes heavily. But this year stands out because so many of the statistics have consistently turned out to be worse than initially estimated.

Other labor market indicators have followed this pattern. The number of job openings, a proxy for labor demand, has not only fallen over the last several months but previous levels were also revised down. The latest estimate shows job openings are now 2 million below the initial figure for the start of the year.

And the problem goes beyond the labor sector to the general economy. The revised estimate for gross domestic product in the second quarter of the year removed an eighth of the previously estimated growth, falling from 2.4% to 2.1%. Investment and business income, in particular, are in bad shape.

Only leftists trust the Liar in Chief's administration.

Professor Principal
2.1  Texan1211  replied to  Ronin2 @2    4 weeks ago
Only leftists trust the Liar in Chief's administration.


Freshman Silent
2.2  Wishful_thinkin  replied to  Ronin2 @2    4 weeks ago

Well, November and December's numbers were revised upward.

Still, the performance wasn't a one-month blip. Job gains for November and December were revised up by a whopping 126,000, with the December tally upgraded to 333,000 from 216,000. The changes portray a stronger labor market in the fall than previously believed.

Split Personality
Professor Guide
2.3  Split Personality  replied to  Ronin2 @2    4 weeks ago

As opposed to having an almost 100% negative outlook about the present political reality 

and posting a June 2023 report from the Republican House's Budget Committee as "proof"?

Then you offer us the words of one of the most untrustworthy biased conservative sources on the internet, The Heritage Foundation.

Sorry, not buying it.

Professor Quiet
3  cjcold    4 weeks ago

I remember when Trump tried to take credit for Obama's great economy which immediately went into the shitter when Trump took the reins.

Just Jim NC TttH
Professor Principal
3.1  Just Jim NC TttH  replied to  cjcold @3    4 weeks ago

You remember wrong then........

Jeremy Retired in NC
Professor Expert
3.2  Jeremy Retired in NC  replied to  cjcold @3    4 weeks ago
I remember when

Then you can provide a link to that.

Professor Guide
3.3  evilone  replied to  cjcold @3    4 weeks ago
I remember when Trump tried to take credit for Obama's great economy...

This week, Clownshoes, has been taking credit of the stock market rally - its his magnetic personality of course.

“Because they think I’m going to be elected,” Trump replied. 

What a narcistic ass.

Professor Principal
3.3.1  Kavika   replied to  evilone @3.3    4 weeks ago

LMAO, that is a new one. 

I stick with ''Walking Eagle'' so full of shit he can't fly.

Split Personality
Professor Guide
3.3.2  Split Personality  replied to  Kavika @3.3.1    4 weeks ago

Much classier than Brandon or Liar in Chief.........

Split Personality
Professor Guide
3.4  Split Personality  replied to  cjcold @3    4 weeks ago

Routine for Trump, if it was positive and happened on his watch, he took credit for it, no matter how long in coming from previous planning and other  Administrations.

If it went sideways like the Navy Seal intrusion in Yemen, he said it was the previous Administration's planning that was at fault.

As far as the economy, Trump declared victory, racists celebrated a white guy in the WH and the economy just kept increasing 

at the same pace through 2019,  Until Covid.


Fact Check: Is Trump or Obama Behind Booming Economy? : NPR

Professor Principal
3.4.1  Texan1211  replied to  Split Personality @3.4    4 weeks ago

Trump is far from unique in taking credit or blaming others 

Biden does the same.

Right Down the Center
Junior Guide
3.4.2  Right Down the Center  replied to  Texan1211 @3.4.1    4 weeks ago
Biden does the same.

I am beginning to wonder if Joe isn't the leader of MAGA since he blames them for the results of every stupid thing he does.

Professor Principal
3.4.3  Texan1211  replied to  Right Down the Center @3.4.2    4 weeks ago

I can easily equate the botched Afghanistan withdrawal( blamed on Trump) with the events in Yemen.

Jeremy Retired in NC
Professor Expert
3.4.4  Jeremy Retired in NC  replied to  Texan1211 @3.4.3    4 weeks ago

But Triator Joe can't blame the prior administration for the deadly retreat from Afghanistan.  

President Biden said he stands "squarely behind his decision" to  withdraw U.S. forces from Afghanistan  on Monday but admitted that the swift collapse of the central government caught the U.S. off guard, telling the nation "the buck stops with me" as  chaotic efforts to evacuate U.S. personnel and Afghan allies from Kabul continue.  (emphasis mine)

Split Personality
Professor Guide
3.4.5  Split Personality  replied to  Jeremy Retired in NC @3.4.4    4 weeks ago
But Triator Joe can't blame the prior administration for the deadly retreat from Afghanistan.

But the prior Administration did sign the deal with the Taliban, ignoring the elected, some say puppet, government of Afghanistan. 

Afghan conflict: Trump hails deal with Taliban to end 18-year war (bbc.com)

Biden extended the deadline to retrieve more equipment and people.

Remember, if you ever went to War College, they preached. PLAN, PLAN, PLAN, for every possibility

but the PLAN usually goes out the window with the first shot fired.

Professor Quiet
3.4.6  Ed-NavDoc  replied to  Jeremy Retired in NC @3.4.4    4 weeks ago

Actually, he has already tried to blame the previous administration for that.

Professor Principal
3.4.7  Texan1211  replied to  Jeremy Retired in NC @3.4.4    4 weeks ago
But Triator Joe can't blame the prior administration for the deadly retreat from Afghanistan.  

Lots of Biden sycophants sure did!

Jeremy Retired in NC
Professor Expert
3.4.8  Jeremy Retired in NC  replied to  Split Personality @3.4.5    3 weeks ago

Now, if you read the link I provided, Traitor Joe admitted that it was his call.  And it ended with 13 US Servicemembers and 100 Afghani civilians dead.  That is all on him.

Jeremy Retired in NC
Professor Expert
3.4.9  Jeremy Retired in NC  replied to  Texan1211 @3.4.7    3 weeks ago

And all without knowing the facts.  Not that its a surprise.

Jeremy Retired in NC
Professor Expert
3.4.10  Jeremy Retired in NC  replied to  Ed-NavDoc @3.4.6    3 weeks ago

Then he finally admitted that he made the call eliminating any chance of putting it on anybody else.  Kind of like border security.


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