According to this morning’s report from the Bureau of Labor Statistics, the economy added just 145,000 jobs in December. Surveys indicated that economists were anticipating closer to 160,000 jobs. This left the unemployment rate unchanged at 3.5%, a 50 year low.
While disappointing, the employment figure doesn’t reflect a significant deviation from the growth trajectory expected for this year. While it indicates slower growth than anticipated for December, the deviation from expectations is likely not significant enough to push the Federal Reserve to reconsider their current strategy of holding rates steady in the short run. Part of the challenge of adding new jobs this late in an expansionary period is that the number of available and qualified workers is dwindling.
This report incorporated any bump in hiring that might have resulted from Trump’s initial announcement of the Phase 1 trade deal with China, but does not take into account the significant turbulence inside the Beltway during that the past few weeks. Next month, we’ll be watching for any further effects of optimism driven by the trade deal with China, pessimism driven by concerns about tension with Iran, and uncertainty created by the ongoing impeachment process.
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Beth Akers is a senior fellow at the Manhattan Institute and a former Council of Economic Advisors economist. Follow her on Twitter here.