The Chicago Journal

Jobs see a new horizon in 2023, more available now

Jobs The American labor market once again demonstrated its tenacity and surpassed expectations on Friday.

Forecasts for market growth were more than three times overshot, making them nonsensical.

What happened

In a combined estimate released last week, analysts predicted that the US economy likely created 185,000 jobs in January.

The fact that the quantity would have exceeded the pre-pandemic average makes the news encouraging.

However, it turned out that the economy was volatile, creating over 500,000 new employment in its wake.

The report

On Friday morning, reports that the US added 517,000 jobs in January surprised American economists.

The jobless rate was expected to rise moderately, according to experts.

In fact, it dipped from 3.5% to 3.4%.

Furthermore, despite prominent layoffs in the media and technology sector, the economy as a whole is still doing well.

Other significant changes include:

  • A rise in employment total, primarily in the hotel and leisure industries.
  • After the adjustments, the US added 4.8 million new jobs in 2022, which was 300,000 more than expected.
  • The 4.4% increase in earnings from a year ago was higher than expected.

A weakening recession forecast

Everyone in 2022 was fazed by recessionary anxieties the whole year since it appeared as though the economy was moving in that way.

Experts and economists of today say that the projections were overplayed.

Moody’s Analytics’ chief economist, Mark Zandi, said:

“Any concern the economy is in recession or close to a recession should be completely dashed by these numbers.”

Read also: Prices of 2022: the highs and lows

The Federal Reserve’s efforts to control inflation by limiting the supply of money in circulation raised concerns for many individuals.

Regulations typically increase the likelihood of a recession by restricting business expansion (or, in some circumstances, stopping it altogether).

The labor market has not buckled as a result of the Fed’s activities, despite the growing inflation.

“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.'”

Although in the past they have relied on a variety of models to create their projections, the pandemic has forced economists to diverge from the conventional.

“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 workers will benefit from the news, but Wall Street isn’t as impressed.

Stocks dropped early on Friday as a result of investors’ surprise at the jobs data, which gave some hint that high interest rates, which reduce corporate profitability, aren’t likely to fall any time soon.

The Fed made it clear that it will keep raising rates in an effort to bring inflation down to its target of about 2% and remove excess liquidity from the economy.

Since it peaked at 9.1% in the summer of last year, inflation has been declining.

In December, the PCE index—the Fed’s favored measure for gauging price hikes from last year.

The labor market’s high tolerance of the Fed’s most aggressive policy in recent memory demonstrates that the organization is free to keep high interest rates without driving unemployment and huge job cuts.

The economy is not fully secure, nevertheless.

People find it challenging to obtain loans due to the growing interest rate, which is bad news for anybody looking to fund a business, buy a home, or take out student loans.

Professor of finance and economics at Loyola Marymount University and head of SS Economics Sung Won Sohn said in a statement on Friday:

“A rolling recession – where various sectors of the economy take turns contracting rather than simultaneously – is in progress.”

Workers market

The most recent employment data reveal that there are still plenty of available jobs.

According to the Job Openings and Labor Turnover Survey (JOLTS), which was released on Wednesday, there were 11 million more job openings in December than was predicted and since July.

Office occupancy had been declining during the preceding three years as a result of the epidemic, but it has just begun to increase.

According to security-card swap data from Kastle Systems, office occupancy rates in 10 major US cities have hit 50% for the first time since March 2020.

Image source: The Wall Street Journal

Opinions expressed by The Chicago Journal contributors are their own.