The US labor market is lagging behind, but it is catching up faster than it first appears.
The US economy is larger than it was before the start of the COVID-19 pandemic. The stock market is higher. But there were 3.6 million fewer jobs in October compared to the end of 2019.
Closing this gap is a key factor for the Federal Reserve to know how and when to focus on price increases. Inflation is testing the central bank’s patience with American businesses and workers.
The latest evidence arrives Friday in the coming week with the release of the November jobs report. Investors and economists expect this to be another big month of hiring, with hundreds of thousands returning to the workforce. The forecast calls for around half a million new jobs. That would bring the two-month running total to nearly a million – the best two-month rebound since before the COVID-19 delta strain began circulating over the summer. This slowed job growth, reminding us of how much the job market is tied to the seed.
Yet perhaps not so much. The Bureau of Labor Statistics continues to revise the data for two months after the release of major statistics. Between June and September, 626,000 more jobs were added to those initially included in the monthly releases. This was first reported by the Washington Post and confirmed by government data. The August revision alone, which added nearly a quarter of a million more jobs than the first report, is the largest on record.
The Fed’s dual mandate – full employment and stable prices – is again proving to be a delicate balance. As high inflation threatens to anchor well beyond energy and food prices, and the strength of the labor market appears more sustainable in the second and third snapshots, the pressure will intensify for the bank is speeding up its response by raising interest rates.
A “Help Wanted” sign is displayed in front of a business on February 4, 2021 in Miami.
Financial reporter Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami, where he is vice president of news. He is the former co-presenter and editor of the “Nightly Business Report” on public television. Follow him on Twitter @HudsonsView.