December job growth may mask troubling economic trends
What job growth means for the economy
Employers added more jobs than expected in December ending a year that defies predictions. Despite signs of a resilient economy, FOX 26's Business Reporter Tom Zizka says there may be some trouble behind the headline.
HOUSTON - Employers added more jobs, than expected, in December, ending a year that defied predictions. The Labor Department says the economy's addition of 216,000 new jobs beat expectations by 27%. While it's especially positive news for those thousands of people, financial experts say there are troubling trends buried in those numbers.
Houston financial strategist Lance Roberts believes the face-value benefit of 2.7 million new jobs created, in 2023, is undeniable, but believes the new year begins with some troubling indicators. "It's kind of like buying a Ferrari," he says, "Just don't look under the hood, because you find out you own a VW."
SUGGESTED: US national debt nears $34 trillion; majority of voters say economy is in bad shape
Paychecks that grew by 4.1%, in 2023, exceeded current inflation. However, some employers are offering that higher wage to, simply, retain the workers they have. The labor participation rate dropped, in December, as more people decided to stop looking for a job.
As for those jobs, the number of open positions has fallen to a near-three-year low, suggesting a tightening labor market. Enthusiasm for workers to 'quit' in search of something better is also falling.
Despite all that, the economy continues to outperform expectations and avoid recession. Roberts says that's, in part, due to trillions of public dollars that are still earmarked for spending. "That's keeping economic growth and employment growth more elevated," he says, "Now, that money's going to be running over the next 12 to 24 months. So, we may still see a recession. It just may be more delayed than people thought, getting here."
That leaves the economy, potentially, propped up until election day before the costs of growing debt, slowing growth, and less prosperity come due. "At some point, we've got to reverse that cycle," says Roberts, "But that's a painful cycle that nobody in politics wants to deal with."
The Federal Reserve meets at the end of the month, and the central bank has already indicated it's done with rate hikes but is unlikely to reduce rates, either. They may have room to wait. A new WalletHub survey finds consumers are 15% more confident about their finances, than a year ago, intending to reduce debt and make large purchases.