US job growth unexpectedly increased in DecemberA strong year for the labor market is ending, government data showed Friday, although voters remain pessimistic about the economy ahead of November’s presidential election.
The world’s largest economy added 216,000 jobs in the final month of 2023 despite expectations of a slowdown in growth compared to November, while The unemployment rate remained unchanged at 3.7 percent.stated the Ministry of Labor.
Near 23 consecutive months below 4%that is, by more than two years, a period that was last achieved in the 1960s.
The latest data reflects the economy and labor market returning to normal. normality before the pandemic. Hiring remains steady, and while employers are advertising fewer job openings, they are not laying off many workers.
Despite low unemployment and cooling inflation, Polls show many Americans unhappy with the economy. This is the shutdown that’s likely to happen problem in the 2024 electionshas baffled economists and policy analysts.
The key factor, however, is public discontent with rising prices. Although inflation has been falling more or less continuously for the past year and a half, Prices are still 17% higher than they were before the inflationary surge.
Federal Reserve President, Jerome Powell, warned of difficult times ahead after the central bank began raising interest rates in the spring of 2022 to attack high inflation. Most economists predicted that the resulting much higher borrowing costs would trigger a recession with layoffs and rising unemployment in 2023.
However, a recession has not arrived and does not appear to be on the horizon.. The country’s labor market, although cooler than in the heat of 2022 and 2023, continues to create enough jobs to keep the unemployment rate near historic lows.
The stability of the labor market is combined with sustainability of the economy as a whole.
Far from entering a recession, andUS Gross Domestic Product -total production of goods and services increased by vigorous annual rate of 4.9% between July and September. Much of the growth was driven by strong consumer spending and business investment.
In the same time, Average hourly wages have exceeded inflation over the past yearleaving Americans with more money to spend.
In fact, as has been the case for most of 2023. consumersgreat engine of American economic growth, In November, they went to stores, shopped online, went to restaurants or traveled.
From March 2022 The Federal Reserve raised its benchmark interest rate 11 times., putting it at its highest level in 22 years, around 5.4%. These higher rates have made borrowing more expensive for businesses and households, but they are on track to achieve their goal: beating inflation.
A cooling labor market is not enough to indicate an approaching recession.. Typically, slowing job growth is a cause for concern. But in the current climate, with inflation still above the Federal Reserve’s annual 2% target, a more moderate pace of hiring is seen as exactly what the economy needs.
Declining labor demand reduces pressure on employers raise wages to retain or attract workers and pass on higher labor costs to customers by raising prices.
Consumer prices rose 3.1% in November compared to the previous year, representing a sharp decline from 9.1% in June 2022, the highest level in four decades. The Fed is so pleased with the progress that it has not raised rates since July and has signaled it plans to make three rate cuts this year.
In addition to the severe blow to the housing market, The rate hikes did not cause much damage to the overall economy. Many industrial sectors, such as health care and government, have proven relatively resilient to rising interest rates.
(According to AP and AFP)