JANUARY 7, 2019 – NEW JOBS SOAR; FEARS OF RECESSION ABATE
The Labor Department released data that the US economy created an astounding number of jobs in December: 312,000, double the 155,000 created in November, and well over expectations for 180,000. The numbers are the best posted since February. 2.64 million new jobs were added over the course of 2018. The US has added jobs for 99 consecutive months, the longest streak of job creation since record keeping began.
The unemployment rate rose from 3.7 percent in November, to 3.9 percent, largely due to more workers entering the workforce. Average hourly wages rose 0.4 percent from November, and are up 3.2 percent from a year earlier, notching the best full year gain since 2008.
Fears had been rising before the holidays the economy was on the verge of a recession, and the December rate hike would be the last one for a while. But the numbers released Friday are not consistent with an imminent recession in 2019. Fed Chair Powell spoke also on Friday; he said the economic data shows good momentum going into 2019, but the central bank is “prepared to adjust policy quickly and flexibly” if necessary. Inflation is under control, and rising wages are not necessarily inflationary, as the link between the two is weak. Powell expects sustained job growth, low unemployment and stronger wage gains going forward, which could also imply more rate hikes to come.