The Bureau of Labor Statistics (BLS) will release the first employment summary of 2016 on Friday, February 5 (technically, it’s the second employment summary released this year, but the first one that covers part of 2016 since the last one covered December). Employment growth for October through December was solid, averaging job gains of 284,000 per month for the three months.
The recent job growth was the final piece of the economic puzzle the Fed needed in order to raise the short-term interest rates in December. In early January, the BLS reported that 292,000 jobs were added in December 2015.
“The bright spot in recent economic reports has been the labor market,” Freddie Mac stated in its January 2016 Insights & Outlook report released on Friday. “Job growth in December beat expectations, with the economy adding 292,000 jobs. Total job gains for 2015 were 2.65 million (+1.9 percent), the second-best year since 1999.”
Will the job growth continue its momentum into 2016? Economic headwinds are persisting, as evidenced by the paltry GDP growth of 0.7 percent in the “advance” estimate for the fourth quarter of 2015 released on Friday.
Not only that, but the recent jobs reports have still showed signs of weakness, namely the labor force participation rate and wage growth, the latter of which has been repeatedly cited by economists as the key to raising the homeownership rate (which fell to a 48-year low in the summer of 2015) .
“The labor force participation rate ticked up to 62.6 percent in December, but is still down 0.1 percent for the year, and well below pre-recession levels,” Freddie Mac stated in its report. “Some of the decline in the labor force participation rate is due to the aging population, but the participation rate for the prime working age population was flat for the year and remains down over two percentage points from December 2007. Wage growth remains anemic, with average hourly earnings flat for the month and up only 2.5 percent on a year-over-year basis.”
Also this week. . .
On Tuesday, February 2, the House Subcommittee on Oversight and Investigations will hold a hearing entitled “Unsustainable Federal Spending and the Debt Limit.” Last week, the Congressional Budget Office reported that the $18 trillion national debt will be pushed even higher over the next 10 years; the CBO says the budget deficit is set to rise every year during that period.