Amidst fears of a looming recession, the newest jobs report shows modest growth across the board. The country added 223,000 jobs in December. With that, unemployment stayed low at 3.5%.
Economists are happy to see this result but maybe not for the reason to be expected.
“It shows that we’ve added 200,000 jobs, it’s not bad, right? Never bad to add more jobs,” said Alex Cartwright, economics professor at Ferris State University. “But that is the smallest gain the last two years.”
While 223,000 added jobs in a month is great, it actually has been higher in recent years but that slowdown is actually a good sign
“What a lot of economists and investors look at that and say is, ‘Okay, the labor market is slowing and therefore maybe the pace of these rate increases will also slow,’” said Cartwright.
The Federal Reserve has been hiking the interest rate to slow inflation. The higher rates lead to less spending, including less by employers, which means less hiring.
“What we saw today makes everybody happy because it’s in one word, moderate,” said Cartwright. “We see a moderate increase in jobs. That’s nice. It shows the labor market’s cooling.”
So seeing the number decrease, while still creating jobs, that shows the efforts are working.
“If we saw a really strong jobs number, and if we saw wages going up quite a bit, the Fed might say we are going to raise rates even more,” said Cartwright. “Because the economy is strong enough to take it.”
If the Fed can keep the balancing act going, of lowering inflation without blowing up the job market or crushing Americans with interest rates, a recession will be avoided.
Moderate growth is what the economy wants to see, but for you and your family? Don’t worry about it. Push forward.
“Nothing, no decision you are making in your personal financial life should be impacted by what that number says,” said Cartwright. “If the unemployment is high, if the unemployment is low, you need to have an investment strategy where you’re buying the same things.”
© 2023 - 910 Media Group
