|The economy added 223,000 jobs in December. Expectations were for 200,000, which we exceeded.
Why it matters: Despite the headwinds of inflation and rising interest rates, the jobs market is retaining its impressive strength.
Big picture: Just as important, the labor force grew by 439,000. Participation declined the previous three months, so this is a welcome development.
- The workforce is now 383,000 above its pre-pandemic participation level and the participation rate rose in December for the first time since August.
Be smart: We still have a way to go. If we had the same participation rate now as in February 2020, there would be 2.95 million more workers in the labor force.
- Wage gains were strong again, rising 0.3% from November and 4.6% annually from December 2021.
- Strong job growth and wage gains will bolster the economy as it slows because of inflation and rising interest rates. It should allow consumers to continue their ability to spend.
Looking ahead: A strong labor market complicates the Fed’s job of lowering inflation, as it interprets a weaker jobs market as a sign its anti-inflationary policies are working. But if inflation comes down as it has been, and we retain a robust jobs market, that would be the ideal scenario.