5 takeaways from a stunning January jobs report | The Hill
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."
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I ask, who could possibly not be happy about all this good economic new?
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)
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!
Only leftists trust the Liar in Chief's administration.
Yep!
Well, November and December's numbers were revised upward.
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.
I remember when Trump tried to take credit for Obama's great economy which immediately went into the shitter when Trump took the reins.
You remember wrong then........
Then you can provide a link to that.
This week, Clownshoes, has been taking credit of the stock market rally - its his magnetic personality of course.
What a narcistic ass.
LMAO, that is a new one.
I stick with ''Walking Eagle'' so full of shit he can't fly.
Much classier than Brandon or Liar in Chief.........
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
Trump is far from unique in taking credit or blaming others
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.
I can easily equate the botched Afghanistan withdrawal( blamed on Trump) with the events in Yemen.
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.
Actually, he has already tried to blame the previous administration for that.
Lots of Biden sycophants sure did!
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.
And all without knowing the facts. Not that its a surprise.
Then he finally admitted that he made the call eliminating any chance of putting it on anybody else. Kind of like border security.