Assessment: The United States will not have a strong job market unless it recovers the trend of rising real wages and increasing labor participation rate that existed in 2018-2019. Everything else is just a poor and unproductive bounce …
The United States December jobs report shows that the labor market remains weak.
The headline 3.9% unemployment rate looks positive, but job creation fell significantly below consensus, at 199,000 in December versus a consensus estimate of 450,000.
“And he who earns wages,
Earns wages to put into a bag with holes …” Haggai 1:6
The weak jobs figure should be viewed in the context of the largest stimulus plan in recent history. With massive monetary and fiscal support and a government deficit of $2.77 trillion, the second highest on record, job creation falls significantly short of previous recoveries and the employment situation is significantly worse than it was in 2019.
The most alarming datapoint is that real wages are plummeting. Average hourly earnings have risen 4.7% in 2021, but inflation is 6.8%, sending real wages to negative territory and the worst reading since 2011.
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