Laissez les bons temps rouler, Madame le Speaker! The good times continued all through 2018 right to the very end, according to the December jobs report from the Bureau of Labor Statistics. The US economy added 312,000 jobs last month, blowing past economists’ predictions and even topping the ADP employment estimate:
Total nonfarm payroll employment increased by 312,000 in December, and the unemployment rate rose to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, food services and drinking places, construction, manufacturing, and retail trade.
The unemployment rate rose by 0.2 percentage point to 3.9 percent in December, and the number of unemployed persons increased by 276,000 to 6.3 million. A year earlier, the jobless rate was 4.1 percent, and the number of unemployed persons was 6.6 million. …
The labor force participation rate, at 63.1 percent, changed little in December, and the employment-population ratio was 60.6 percent for the third consecutive month. Both measures were up by 0.4 percentage point over the year. (See table A-1.)
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 4.7 million, changed little in December but was down by 329,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
That’s a nice bounce-back from a middling November report, but there was good news on that front as well. Revisions in this report added 58,000 jobs to the previous two months, moving November up to 176K and October to a more robust 274K jobs added. The average in the last quarter of 2018 rose to 254,000 jobs added per month — a pace well above that needed to keep pace with population increases.
That was enough to ensure that 2018 showed a significant year-on-year increase:
JUST IN: US employers added 312,000 jobs in December, well more than economists had forecast. The unemployment rate ticked up to 3.9% as more people looked for jobs. Employers added 2.6 million jobs in 2018, compared to 2.2 million in 2017. https://t.co/6vwiBhnFaR pic.twitter.com/fvJXXF6HOF
— CNN Business (@CNNBusiness) January 4, 2019
That wasn’t the end of the good news, either. Wages went up 3.2% in December, the third month in a row that annualized wage gains exceeded 3%. That outpaces any inflation that might be taking place and represents the first real gain for workers in the past decade of “recovery” from the Great Recession.
That is directly related to the one seemingly sour note in the report. The unemployment rate rose two-tenths of a point to 3.9%, but that’s actually the result of other good news. Thanks to the demand for workers, the civilian labor force grew by 419,000 in December while the ranks of those not in the labor force fell by 237,000. The higher the labor force numbers go, the higher the unemployment rate will become until those new or returning entrants find jobs. The labor market has grown healthy enough to reduce the overhang of chronically disconnected workers, and the sustained improvement in wages suggests we’re reaching the end of that overhang. I hate to say I told you so, but … actually, I don’t hate to say that.
The timing of this report makes the results even more dramatic than they’d be otherwise. The last two years of economic growth have come while Republicans controlled Washington (mostly). It came while Donald Trump and the GOP leadership in Congress set the nation’s economic and regulatory policies. Democrats will now take over some of that responsibility with their control of the House, a prospect that can’t thrill those Democrats who grasp the potential for political disaster.
The objective evidence shows an economy running at full steam under Republican policies. Any attempt to reverse the policies of the last two years will put Democrats on the hook for the blame if job creation cools down and wages stagnate again. This is the worst possible set-up for Nancy Pelosi’s incoming majority.