Employers add 216,000 jobs
Still, many Americans are dissatisfied with the economy despite the easing of inflation
The nation's employers added a robust 216,000 jobs last month, the latest sign that the American labor market remains resilient even in the face of sharply higher interest rates.
Friday's government report showed that December's job gain exceeded the 173,000 that were added in November. The unemployment rate was unchanged at 3.7% — the 23rd straight month with joblessness below 4%.
Some details of the report, though, may disappoint the inflation fighters at the Federal Reserve, who might now be inclined to delay any cuts in their benchmark interest rate. Average hourly wages rose 4.1% from a year earlier, up from a 4% gain in November, which could make it harder for the Fed to slow inflation back to its 2% target.
Still, taken as a whole, the December jobs report reflected a healthy economy, with steady job growth, rising wages and cooling inflation. It provided the latest evidence that the Fed may be able to achieve a notoriously difficult “soft landing,” in which the central bank would conquer inflation without causing a steep recession.
Yet despite the low unemployment and easing inflation, polls show that many Americans are dissatisfied with the economy. That disconnect, which will likely be an issue in the 2024 elections, has puzzled economists and political analysts.
A key factor is the public's exasperation with higher prices. Though inflation has been falling more or less steadily for a year and a half, the lingering financial and psychological effects of the worst bout of inflation in four decades have soured many Americans on the economy. Prices are still 17% higher than they were before the inflation surge began and are still rising.
Pollsters and economists say there has never been as wide a gap between the underlying health of the economy and public perception. A poll conducted in November by The Associated Press-NORC Center for Public Affairs Research, about three-quarters of respondents described the economy as poor. Two-thirds said their expenses had risen.
Asked why many Americans remain dissatisfied by the economy, Acting Labor Secretary Julie Su said Friday that “part of the unfortunate reality is we live in polarized times.''
Many of the Biden administration's domestic policies, including its investment in infrastructure, are “wildly popular,” Su said.
Despite their stated discontent with the economy, Americans have kept spending. Average hourly pay has outpaced inflation over the past year, leaving consumers with more money to spend. Indeed, as they did for much of 2023, consumers, a huge engine for U.S. economic growth, hit the stores in November, shopped online, went out to restaurants or traveled.
Friday's jobs report did contain some cautionary notes. Paul Ashworth, chief North America economist at Capital Economics, noted that the government revised down its previous estimate of job gains for October and November by a combined 71,000.
And just as in November, December's job growth was concentrated in just a few industries: Leisure and hospitality companies added 40,000, health care 38,000 and governments 52,000.
Indeed, from October through December, private-sector employers have added just 115,000 jobs a month, the lowest three-month average since companies were laying off workers in mid-2020 during COVID-19 lockdowns.
In addition, the proportion of people who either have a job or are looking for one fell in December to 62.5%, the lowest level since February.