Key Points:
- The U.S. economy added 145,000 jobs in December, slightly below market expectations of 160,000 jobs.
- Since December 2016, the economy has created more than 6.9 million jobs. This is 5.3 million more jobs than the 1.7 million projected by the Congressional Budget Office for that time period.
- Significant positive momentum in the U.S. labor market continues.
Economist Corner
Normally, as an economy approaches “full employment” job growth slows sharply because firms cannot find additional workers. Most economists expected this pattern to take hold in the current labor market, but job creation has significantly exceeded these expectations on the upside. This has important implications for social justice. A “hot” jobs market like this one tends to benefit lower-skilled workers disproportionately, a trend that reduces income inequality by raising incomes towards the bottom.
This jobs number also calls into question the assumptions of commentators who anticipate slowdowns in the labor market and in GDP growth. Job growth in the U.S. continues and is even accelerating relative to earlier in the year.
A few countries, like Australia, have experienced decades of growth without a recession. The economics profession lacks any consensus explanation for why or how this has occurred. Meanwhile, the latest U.S. data release shows no signs of unemployment rising towards its “natural” rate. This jobs report raises the specter not of a looming recession, but instead of whether economists may one day ask whether the U.S. has joined Australia in experiencing “unnatural” growth.