Jared Bernstein on the December Jobs Report: Weak Labor Demand and Rising Unemployment

December Jobs Report Analysis

• 📉 The December jobs report shows a significant decrease in job growth, with the second half of the year being a hiring freeze, marking the lowest job growth outside of a recession since 2003.
• ⚠️ The manufacturing sector is described as being in a bonafide recession, and retail trade shed 25,000 jobs.
• 📊 While the unemployment rate ticked down, this is from a different survey and doesn't always align with other hiring indicators.

Wage Growth and Part-Time Employment

• 📈 Wages are growing at 3.8%, which is beating inflation, offering some positive news.
• 🕰️ The three-month average of those working part-time for economic reasons is the highest since COVID, and the highest since 2011 when excluding that period, indicating labor market softening.

Labor Supply vs. Labor Demand

• 🧩 A key question is how to reconcile low hiring with a slowly rising unemployment rate. One answer is a significant decrease in labor supply.
• 🌍 Factors contributing to reduced labor supply include an aging population and immigration policies.
• ⚖️ The analysis concludes that labor demand is weaker than labor supply, which is the primary driver of rising unemployment.