'Downside Risks': Economists React To The December Jobs Report On X
Nonfarm payroll employment rose by 216,000 jobs in December, higher than consensus estimates, the Bureau of Labor Statistics reported Friday.
The unemployment rate remains at 3.7%.
The construction industry continued to grow, adding 17,000 jobs in December. The construction industry added an average of 16,000 jobs per month in 2023 after growing by 22,000 jobs per month in 2022.
The leisure and hospitality sector grew by 40,000 jobs in December and averaged 39,000 jobs added per month in 2023. Employment in this industry is now 1% short of its pre-pandemic, February 2020 job level.
Despite a headline number showing job gains above consensus, the word "noisy" was used by many economists and others who regularly dissect the monthly jobs report for information on the state of the economy. Here's how some of them reacted to the jobs report with posts on X, formerly Twitter.
JUST IN: Another good jobs report. The US economy added 216,000 jobs in December to finish the year on a strong note.
— Heather Long (@byHeatherLong) January 5, 2024
Unemployment rate: 3.7% (same as Nov.)
Wage growth: 4.1% in past year (well above 3.1% inflation)
Another month, another very good jobs report. The economy continues to create lots of jobs, and unemployment remains steadfastly low. And slowing job growth, fewer hours, and cuts to temp employment suggest the economy is steadily cooling, and inflation will continue to moderate.
— Mark Zandi (@Markzandi) January 5, 2024
That's 23 months with an unemployment rate below 4.0
— Martha Gimbel (@marthagimbel) January 5, 2024
*SWAPS PRICE MARCH RATE CUT BACK TO 50/50 ODDS AFTER JOBS REPORT
— Joe Weisenthal (@TheStalwart) January 5, 2024
US Jobs Report Policy Takeaway: market participants that have priced in March rate cuts need to roll those back. We think the policy rate is too restrictive but do not think a rate cut will be appropriate until June. We expect four 25bps cuts in 2H'24 pic.twitter.com/xBY5FXnIlM
— Joseph Brusuelas (@joebrusuelas) January 5, 2024
One of the unexpected bright spots in #JobsReport data last year has been continued employment growth in construction, which is typically very sensitive to high interest rates. Other employment growth continues in care sectors like health care, social assistance, and education.
— Kate Bahn (@LipstickEcon) January 5, 2024
Weakest sectors in Dec:
— Guy Berger (@EconBerger) January 5, 2024
Temp agencies (-33K)
Transportation & warehousing (-23K)
One reason for ongoing robustness in the labor market is that a slight cooling of private sector demand in 2023 gave the public sector a chance to do "catch-up hiring" that was impossible amidst the soaring nominal wage environment of 2021-22. pic.twitter.com/0ju6ctbwTC
— Matthew Yglesias (@mattyglesias) January 5, 2024
4% nominal wage growth when inflation is like 3% (YoY) is exactly what we want. Nominal wage growth should come down slower than prices to make up for some of the real wage losses during inflationary burst of 2021-22.
— Arin Dube (@arindube) January 5, 2024
An interesting dynamic is that growth and inflation had slowed in part because of all the rate hikes, but they’ve also slowed a lot due to bullwhip effects, and there’s no clear-cut way to show which part has been more dominant. Big implications for 2024 though.
— Conor Sen (@conorsen) January 5, 2024
After looking through most of the data -
— Guy Berger (@EconBerger) January 5, 2024
This is not a bad report, but it is a disappointing one. Household survey weak; NFP trajectory a tiny bit softer; wage growth firmer.
IMHO our assessment of the labor market's health should be marginally weaker after today. https://t.co/VMv5InjOrJ
"The 216,000 gain last month, was not quite as good as it looks at first glance" - @CapEconUS pic.twitter.com/GLLDshwlG3
— James Pethokoukis ⏩️⤴️ (@JimPethokoukis) January 5, 2024
The Dec jobs report confirms cooling, narrowing labor demand & while wages were a little firmer than expected what we have learned is that there is not much of a link b/w wages and inflation--wages are cooling most where consumer prices are stickiest and vice versa pic.twitter.com/YQZ8RTW1cS
— Julia Coronado (@jc_econ) January 5, 2024
Could be data noise, seasonality issues, etc but this jobs report raises downside risks. Fed needs to take note
— Skanda Amarnath (@IrvingSwisher) January 5, 2024
Household survey was weak in the most concerning places
Establishment survey less trustworthy due to low collection rate. Still shows payroll slowdown post-revisions
I focus more on employer survey; if I focused more on household I'd be more cautious.
— Mike Konczal (@mtkonczal) January 5, 2024
But that's balance of risks we face - a solid labor market with historic disinflation at risk of a serious slowdown. Luckily the Fed has tools to take both sides of its mandate seriously. 8/8
I remain optimistic about the economy in 2024. But the biggest threat is if the Fed fails to pivot following the soft landing.
— Arin Dube (@arindube) January 5, 2024
Regardless of what rates have done so far, keeping them elevated over an extended period imposes real risks. https://t.co/Z80l0jtWVa
