ON THE JANUARY JOBS REPORT
The labor market in the United States continued to show strong gains in January 2022, with the Bureau of Labor Statistics reported that the United States economy added 467,000 jobs in the month. In addition, the monthly totals for November and December were revised sharply upward. Combined, these new figures point toward a much healthier and tighter labor market than previously reported. Rather than losing steam at the end of 2021, as the initial figures had suggested, the US economy continued a strong recovery through the fall of 2021 which has continued into 2022.
The revised data for firm payrolls are also consistent with other indicators which suggest a very tight labor market, perhaps nearing full employment. The unemployment rate declined sharply throughout 2021 and has remained low at 4.0% in January. Initial unemployment claims fell sharply as well, and after small increases in January with the height of the Omicron surge, have declined recently and remain at historically low levels. Job openings remain near record levels, with increased turnover and businesses continuing to report difficulty finding workers.
All in all, the US economy appears to be on a strong footing. Rather than slowing with the end of federal stimulus programs and enhanced unemployment benefits, the private economy has roared back. Monetary policy continues to be historically accommodative, which has helped the drive accelerating inflation we’ve experienced. The US economy should be able to absorb the coming interest rate increases, which should help cool further price pressures while allowing for continued growth.
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Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.