Friday’s Labor Dept. nonfarm payrolls report has just set a record for annual job creation. The U.S. added 252,000 new jobs in December to extend the strongest streak of hiring since the mid-1990s, but wages fell and more people dropped out of the labor force to slightly tarnish an otherwise excellent employment report.
The economy has added at least 200,000 jobs for 11 straight months, the longest streak in almost 20 years. In 2014, the U.S. created 2.95 million new jobs to mark the largest gain since a 3.18 million increase in 1999.
In December, President Obama noted that the economy had created 10.9 million jobs over the past 57 months. The number is now 11.2 million with December added in plus an additional 50,000 jobs added to the past 2 months. This streak of growth is improving the net job creation over which Mr. Obama has presided, which now puts him in fourth place among the last 10 presidents in terms of job creation.
The economy has 6.1 million more jobs today than when Mr. Obama took office in January of 2009. That puts his total job creation ahead of presidents John Kennedy, Gerald Ford, and George H.W. Bush, who each served one term or less. It also puts him well ahead of President George W. Bush, whose final year in office also comprised the beginning to the longest and deepest recession since the Great Depression.
The nation’s unemployment rate also continued to tumble, falling to 5.6 percent from 5.8 percent and hitting the lowest level since June 2008, the Labor Department said Friday. The fall in the jobless rate stemmed partly from the increase in the number of people working, but more Americans also dropped out of the labor force. As a result, the percentage of working-age Americans 16 or older fell again to match a postrecession low of 62.7 percent — a level last seen in 1978.
That may be why wages aren’t rising above 2 percent annually, when 3 to 4 percent annual wage increases are the norm during economic recoveries. Wage gains have ranged from 1.7 percent to 2.1 percent since 2010, just two-third as fast as they normally grow. Economists predict a tightening labor market will spur higher wages but so far earnings haven’t budged much.
And Chicago Fed President Charles Evans has speculated that the Fed won’t have to raise interest rates until 2016, if inflation doesn’t pick up to the 2 percent target of stated Fed policy.
Private payrolls increased 240,000 after rising 345,000 in November. Goods-producing jobs jumped in December, led by construction which advanced 67,000 in December after a 20,000 increase the month before. Manufacturing employment increased 17,000, following a jump of 29,000 in November. Mining rose 3,000 in December, following a 1,000 boost the prior month.
Private service-providing jobs gained 173,000 after a 294,000 jump in October. The latest increase was led by professional & business services. Government jobs increased 12,000 after rising 8,000 in November.
Harlan Green © 2014
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