Jobs market turns up with great results in 2023
Jobs – On Friday, the American jobs market once more proved its resilience and outperformed forecasts.
Market growth outperformed forecasts by more than three times, rendering recessionary estimates absurd.
What happened
Analysts anticipated that the US economy likely generated 185,000 jobs in January in a joint estimate that was published last week.
The news is positive because the amount would have been higher than the pre-pandemic average.
But as it turned out, the economy was erratic, replacing it with almost 500,000 new jobs.
The report
American economists were shocked to learn on Friday morning that the country gained 517,000 jobs in January.
Experts anticipated a slight increase in the unemployment rate.
As opposed to that, it dropped from 3.5% to 3.4%.
Furthermore, the economy as a whole is still performing well despite high-profile cutbacks in the media and technology industry.
Other significant changes include:
- A rise in employment across the board, particularly in the hospitality and leisure sectors.
- After the changes, the number of jobs added in the US in 2022 was 4.8 million, which was 300,000 higher than anticipated.
- It was more than anticipated that wages rose by 4.4% from a year earlier.
A weakening recession forecast
Because it seemed like the economy was headed in that direction in 2022, everyone was troubled by recessionary fears the whole year.
Today’s experts and economists claim that they overestimated the forecasts.
Mark Zandi, 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.”
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Many people were concerned about the Federal Reserve’s attempts to lower inflation by reducing the amount of currency in circulation.
Regulations frequently make a recession more likely by stifling business growth (or, in some circumstances, stopping it altogether).
Despite the rising inflation, the Fed’s actions have not caused the labor market to tremble.
“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 pandemic has compelled economists to break from the ordinary, although in the past they have relied on a range of models to make their forecasts.
“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 be positive for the workforce, but Wall Street isn’t as excited.
Stocks fell on Friday morning as a result of investors’ surprise at the jobs report, a hint that high interest rates, which lower corporate profitability, aren’t going anywhere soon.
The Fed made it apparent that it will maintain raising rates in an effort to reduce inflation to its objective of about 2% and drain the economy of excess liquidity.
Inflation has been falling since last summer, when it peaked at 9.1%.
The PCE index, the Fed’s preferred method of gauging price increases, increased from the previous year in December.
The labor market’s strong tolerance for the Fed’s most aggressive policy in recent memory demonstrates that the institution is free to keep interest rates high without causing unemployment and widespread job cuts.
However, the economy is not entirely safe.
The rising interest rate makes it difficult for people to make loans, which is bad news for anybody trying to finance a company, purchase a home, or take out school loans.
Sung Won Sohn, director of SS Economics and a professor of finance and economics at Loyola Marymount University, said in a message on Friday:
“A rolling recession – where various sectors of the economy take turns contracting rather than simultaneously – is in progress.”
Workers market
According to the most current job data, early signs indicate that it is still a worker’s market.
In December, there were 11 million more opportunities available than expected and since July, according to the Job Openings and Labor Turnover Survey (JOLTS), which was published on Wednesday.
Due to the pandemic, office occupancy has been falling for the previous three years, but it has just just started to rise.
Office occupancy rates in ten major US cities have reached 50% for the first time since March 2020, according to Kastle Systems’ security-card swap data.
