Jobs – On Friday, the American job market beat expectations and proved its resiliency once more.
The market growth estimates were astonishingly off by more than three times.
What happened
According to an unified estimate issued last week, the US economy added at least 185,000 jobs in January.
The good news is that the amount would have been higher than the pre-pandemic average.
However, with the economy unpredictable, it led to the creation of almost 500,000 new jobs.
The report
The news that the US gained 517,000 jobs in January awed American economists on Friday morning.
Analysts predicted a small uptick in the unemployment numbers.
It fell from 3.5% to 3.4%.
Furthermore, the economy as a whole is still performing strongly despite notable cutbacks in the media and technology industry.
Other significant changes include:
- An boost in overall jobs, predominantly in the hospitality and leisure sectors.
- Following the changes, the US created 4.8 million new employment in 2022—300,000 more than predicted.
- Earnings increased by 4.4% from a year earlier, which was more than anticipated.
A weakening recession forecast
Since it seemed as though the economy was headed in that direction, everyone in 2022 was worried about recessionary fears the whole year.
The forecasts, according to experts and economists today, were exaggerated.
Mark Zandi, the chief economist of Moody’s Analytics, said:
“Any concern the economy is in recession or close to a recession should be completely dashed by these numbers.”
Read also: Bed Bath & Beyond takes another hit with grim announcement
Many people expressed unease over the Federal Reserve’s attempts to curb inflation by lowering the supply of money.
By preventing company development, regulations often raise the chance of a recession (or, in some circumstances, stopping it altogether).
Despite the rising inflation, the Fed’s actions haven’t caused the labor market to collapse.
“Last year involved the biggest mis-reading [SIC] of the economy in the labor market,” Justin Wolfers, an economist, tweeted on Friday.
“The recession talk spiked to new highs, even as the economy recorded a rate of job growth that any real economist will tell you spelled ‘BOOM.'”
The virus forced economists to differ from the customary, even if in the past they have relied on a variety of models to make their projections.
“My meta-theory of why so many people have been wrong about the economy for so long is that many economists (and econ journos) are incapable of acknowledging that sometimes, good things happen,” said Wolfers.
The Feds and hiking rates
The news will encourage the employees, but Wall Street isn’t as elated.
Due to investors’ shock at the jobs report, which hinted that high interest rates, which lower corporate profitability, are unlikely to decline very soon, stocks fell early on Friday.
The Fed made it apparent that it will keep raising interest rates in an effort to reduce inflation to its target level of approximately 2% and drain the economy of excess liquidity.
Inflation has been falling ever since it hit a peak of 9.1% in the summer of last year.
The Fed’s preferred indicator for estimating price increases from the previous year was the PCE index in December.
The labor market’s strong tolerance for the Fed’s most assertive policy in recent memory shows that the bank is free to maintain high interest rates without causing unemployment and significant job losses.
Despite this, the economy is not entirely secure.
The rising interest rate makes it difficult for people to get loans, which is bad news for anybody trying to finance a company, purchase a home, or take out school loans.
Sung Won Sohn, an economist and finance professor at Loyola Marymount University and the director of SS Economics, issued the statement below on Friday:
“A rolling recession – where various sectors of the economy take turns contracting rather than simultaneously – is in progress.”
Workers market
The most recent job data shows that there are still many open positions.
There were 11 million more job vacancies in December than was anticipated and since July, according to the Job Openings and Labor Turnover Survey (JOLTS), which was published on Wednesday.
Because of the pandemic, office occupancy had been decreasing over the previous three years, but it has just started to rise.
Office occupancy rates have reached 50% for the first time since March 2020 in ten major US cities, according to security-card swap data from Kastle Systems.
Image source: KYMA
