US Jobs Numbers Records Huge Gains, There Might Be More Than Meets the Eye.
The Labor Department’s report on Friday revealed broad-based job gains that nearly doubled December’s growth and exceeded analyst expectations by almost three times. The unemployment rate dropped to a low of 3.4%, the lowest since 1969. The report indicates that the job market continues to thrive despite the pandemic and rising prices. However, some economists argue that the job market may not be performing as well as the numbers suggest.
The Labor Department adjusts its jobs reports each month to account for seasonal hiring trends, but the pandemic has disrupted this process. This, combined with the return of striking university employees in California and unseasonably warm weather in many parts of the country, which boosted hiring in weather-dependent sectors like construction, may have affected the January report, according to economists.
The recent layoffs in tech, moderating wage growth, and persistent high inflation all point to an unsteady US economy. The Federal Reserve’s .25% interest rate hike on Wednesday and wage growth that cannot keep up with inflation add to this uncertainty. The next few weeks will provide crucial information as companies release their earnings and projections, including more widespread layoffs. Tech companies may use the busy news cycle as a guise for their own layoff plans, hoping that the numbers and information will go unnoticed.
An often-overlooked factor in conjunction with new jobs numbers is the Labor Participation Rate, which is at 62% and nearly 3 Million below the pre-pandemic numbers.