That's why you should not worry that job growth has slowed down


We are so used to really fantastic working relationships that it can be hard to remember what is just a good example. Good, at least until now.

This is because November's job numbers were, depending on your point of view, either the very definition of solidly not spectacular or incredibly solid: the economy added a decent 155,000 jobs, wages increased by 3.1 percent last year and unemployment remained at almost 50% of 3.7%.

We can certainly do a lot worse. At the same time, however, it is true that we can and have done better recently. After all, the 155,000 jobs we added in November were a little less than 210,000 on average over the previous three months. But there are a couple of reasons why you should not worry too much about this. The first is that it is too early to say whether the growth of employment actually slowed down last month and, if so, whether it will continue. These numbers, see, come with such a large margin of error that you never want to try to read too much in every single job. Maybe this will be updated, or maybe it will not be, but it will still be just a blip on our way to our previous trend. We will not know of the past until the future.

The second is that, since most people who want to get a job have one, we would expect that job growth will slow down anyway. The complicated thing here is that there is no way of saying for sure when this will happen. A lot of economists thought it would be when the unemployment rate would have been the 5th, then 4% and finally 4%, but job growth has continued to grow at almost the same rate all the time. The fact that wage growth has now begun to rise, which one would expect to happen when employers have to fight for a small group of would-be workers, tells us we may be there soon – but only could.

In fact, the economy could still hold around 200,000 jobs a month, as even now the labor market seems to have more unused space than is thought with 3.7% unemployment. For example, the number of people who want to work full-time but can only find part-time work has actually increased last month – which is why the largest unemployment rate has increased from 7.4 to 7.6% – and not has decreased a lot in the last year o. And for another, the 25-54 years that you think would be in the middle of their years of work, which they actually do, did not even go back to where it was before the real estate bubble burst, not to mention the record it made before the technological bubble.

All this means that we do not know when the economy will stop adding 200,000 jobs a month, but it will hardly be the end of the world – or recovery – when it does, and it will start creating 150,000 jobs a month instead. . That kind of slowdown is what should happen when unemployment becomes so low, but it's still fast enough to keep pushing unemployment even lower.

The challenge for the Federal Reserve is to understand if this means that it must continue to take advantage of the brakes, or can afford to leave only the car that is our economy costs for a while. The stakes could not be higher for the Americans of the working class in particular. Why? Well, a tight labor market is the best social program for them. As of Martha Gimbel points out, it is the low-income workers who obtained the highest rewards last year. That's why keeping the shot as long as possible is so important.

This is a case in which quite well would be good enough – if, that is, the Fed allows it.


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