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The release of the government’s jobs report for November means we now have all but the final chapter of the employment book for 2016. While we can’t say flatly that the story will have a happy ending, the tone remains fairly upbeat, particularly with the news that the unemployment rate plunged to a nine-year low of 4.6 percent last month. That was down from 4.9 percent in October.
The pace of hiring is in line with expectations. The Labor Department says the economy added 178,000 jobs in November, particularly in professional and business services and in health care. Elsewhere, manufacturing employment fell again and so did retail employment.
“Reflecting the growing preference to shop online, retail trade jobs were shaved and jobs at warehouses rose. Construction jobs are being added as the housing sector continues to show promising growth,” says Lawrence Yun, chief economist with the National Association of Realtors.
On the full disclosure front, we have to note that the labor force participation rate — measuring those working or looking for work — fell slightly last month but remains close to where it has been over the past few years.
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What about wages?
The economy never moves in a straight line, and the slightly slower pace of wage growth (with average hourly earnings up 2.5 percent over the past year) is one of the downsides of the November employment report. Still, if the job market continues to heal next year as is widely expected, it is reasonable to expect that we’ll see better news about Americans’ pay. That’s one finding from our just-published Bankrate Economic Indicator, a survey of private sector economists.
Between surging consumer confidence levels, a booming stock market and home prices back above pre-recession levels, a number of boxes indicative of a healthy economy are being checked-off. Beneath these broad brushstroke trends, the election has provided a dramatic demonstration that not everyone has personally experienced the benefits of the economic recovery, which began in 2009. Addressing that divide is the huge challenge facing President-elect Donald Trump.
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Lingering challenges and opportunities
The economy has accelerated here in the second half of the year, and the employment report confirms that the process is continuing. Headwinds now include the stronger dollar and rising bond yields. The risks and opportunities associated with advances in technology and a globally-connected economy will persist for as long as the eye can (and cannot) see.
“While the recovery from the Great Recession continues, the long-term problems of stagnant wage growth and declining labor force activity among less-educated workers, and especially men, remain very challenging,” says Harry Holzer, professor of public policy at Georgetown University.
Absent a truly unexpected event between now and mid-December, the Federal Reserve is virtually certain to raise interest rates for the first time in a year. We’re most curious to see what members of the Fed’s policymaking Federal Open Market Committee have to say about the possible future trajectory of interest rates, particularly in light of Republican control of the White House and Congress, and the probability of higher federal deficits over the next several years.
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