When November’s jobs number was below what had been projected, many economists predicted a near-term U.S. recession.
Those economists may want to rethink that idea, especially with the blowout December 2018 jobs report. The U.S. economy added another 312,000 jobs – suggesting the economy is on more solid footing than many had thought.
That brings total employment gains in 2018 to a three-year high of 2.64 million.
“The far-bigger-than-expected 312,000 jump in non-farm payrolls in December would seem to make a mockery of market fears of an impending recession," said Paul Ashworth, chief economist at Capital Economics, as quoted by Business Insider.
Granted, the unemployment rate did rise to 3.9% from a 49-year low of 3.7%, but
that’s because a huge number of people entered the workforce in search of jobs.
Economists had expected the pace of hiring to slow in December to just 180,000. Instead, they got quite a surprise, as the U.S. added the highest number of jobs since February 2018.
Even better, November 2018 jobs were revised higher from a gain of 155,000 to 176,000. October 2018 was also revised upward from 237,000 to 274,000.
After all those adjustments, jobs gains averaged 254,000 per month for the last quarter of 2018.
According to economist, Tim Mahedy,
“This is the strongest employment report of this economic cycle -- hands down. While we've seen greater job gains in some months, the plus-300,000 number along with another increase in average hourly earnings clearly signals that the economic expansion ended 2018 on strong footing. Perhaps most surprising was the two-tenths rise in the unemployment rate due to an increase in participation.”
Employment in health care rose by 50,000 in December. Food services and drinking establishments increased by 41,000 jobs. Construction employment rose by 38,000. Manufacturing added 32,000 jobs in December and retailers gained 24,000.
Wages shot higher, too.
Average hourly earnings jumped 3.2% year over year, matching the fastest pace since 2009.
"The secret sauce here is probably wage increases. Rising wages paired with weakening inflation mean real wages are rising strongly, and that's pulling more people into the workforce," said Robert Frick, corporate economist with the Navy Federal Credit Union, as quoted by CBS News. "This could boost the economy this year, as more disposable income means more consumer spending.”
“President Trump’s policies continue to fuel strong and steady job growth,” Labor Secretary Alexander Acosta said, as quoted by Politico. “Wage gains remain steady. Paychecks are growing.”
While others may fear a slowdown and recession, we see no signs of that happening.
Instead, we believe the U.S. economy is likely to continue its strong growth trend.
Stay tuned to The Cheap Investor for more on how to invest in continued growth.