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January’s jobs report looks ahead to 2024, revealing that 353,000 nonfarm jobs were added to the U.S. economy that month.
Lauren Goodwin, economist and chief market strategist at New York Life Investments, and Julia Pollak, chief economist at ZipRecruiter, spoke with Yahoo Finance to discuss the strength of the unemployment numbers and why the data may not be as robust as it seems.
“We added 3.1 million jobs for the year, which is kind of a massive number, higher than our previous estimate of 2.7 million,” Pollack said. “Having said that, we have to be careful with all the numbers. The Household Survey was negative in both December and January, meaning we only increased by 1.9 million for the year. That’s a lot weaker. ”
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by luke carberry morgan.
video transcript
Julie Hyman: Now, let’s take a look at what’s happening with the job data. This, of course, is another big driver of the market today and shows that the economy continues to strengthen. But does this mean interest rates will remain high for a long time to come?
Please welcome Lauren Goodwin, Economist and Chief Market Strategist at New York Life Investments, and Julia Pollak, Chief Economist at ZipRecruiter. Julia, I’d like to start here. Because we were baffled about this all day, wondering why it was so good and why it was so unexpectedly good. Julia, is there something uniquely unpredictable about this job market?
Julie Pollack: That’s true. One reason is that the labor market is no longer as seasonal as it was before the pandemic. However, December and January were much better than expected and well above trend. Employment growth also spread across industries.
And these benchmark revisions revealed that 2023 was a much stronger year for the labor market than originally reported. In the year he added 3.1 million jobs. That’s something of a blockbuster number, beating the previous estimate of 2.7 million.
That said, there is a caveat to all these numbers. This means that the Household Income and Expenditure Survey was negative in both December and January. And when looking at the full year, it shows a much weaker increase of only 1.9 million cases.
Jared Breichle: Lauren, maybe we can touch on this, but before we do that, I’d like to hear your thoughts on the big picture, at least just the explosive numbers that we saw in the payroll headlines this morning.
Lauren Goodwin: I mean, Julia, that’s exactly right. This is a very strong number, not only from a headline standpoint, but also from the standpoint of stable unemployment and very high wage growth. My main opinion, from an investor’s perspective and also from the Fed’s perspective, is that this is a difficult number for corporate profitability.
Not only are wages growing significantly, as I mentioned earlier, but working hours are also rapidly decreasing. This suggests that companies may be trying to manage the soaring labor costs seen over the past few years by reducing the time it takes to layoffs. This is very typical late-cycle behavior.
Julie Hyman: Still, we continue with normal economic cycles. But from Julia’s perspective, these are a bit of a difficult time. So Julia, what do you think will happen next? What can we predict regarding the current trajectory of the job market?
Julie Pollack: So when I first saw the number of hours, I was pretty shocked too. It fell off a cliff. 34.1 hours per week is well beyond what is normally seen in a healthy labor market.
That being said, Department of Labor statistics then say wait, wait, wait, don’t worry too much. The reduction in hours is due to inclement weather in mid-January. As a result, many workers experienced snow days.
As a result, the number of hours worked decreased and hourly wage estimates increased. Therefore, the 4.5% wage increase figure is not an accurate representation of what actually happened. Other data suggests that wage growth has declined for the third consecutive quarter and is actually trending in line with a level consistent with 2% inflation.
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