The economy added 148,000 jobs in December, according to the latest data from the Labor Department, with the largest growth coming in the construction, manufacturing and health care industries.
The unemployment rate was 4.1 percent, unchanged from the previous month. The labor participation rate was 62.7 percent, also the same as in November.
The December figures closed out 2017 on a largely positive note, though some economists had expected larger jobs growth in the final month of the year.
So what does the December report mean for American workers? We asked experts to weigh in on the numbers, and what they meant for the economy as a whole in 2017.
The economy added an average of 174,000 jobs a month in 2017, down from the 186,000 jobs per month average in 2016, in former President Barack Obama’s last year in office. But
“that’s still quite respectable for the economic expansion which began in mid-2008,” said Mark Hamrick, Bankrate.com’s senior economic analyst. “Remember, it should take only about 80,000 to 100,000 jobs a month added just to keep pace with growth in the workforce (or to keep the jobless rate steady).”
Is the growth slowing down? In the first two quarters of 2017, the average year-over-year jobs growth was 1.6 percent, according to Douglas Holtz-Eakin, the president of the American Action Forum. That number fell to 1.4 percent in the third quarter, and the final year-over-year was also 1.4 percent, Holtz-Eakin said.
The retail industry took a hit, losing 20,000 jobs last month as consumers continued the trend of doing more shopping online. “That’s hard to swallow and suggests that there must be something odd in the seasonal adjustment,” Holtz-Eakin said.
The unemployment rate fell over the course of last year, from a high of 4.8 percent in January — President Donald Trump’s first month in office — to 4.1 percent in December. There’s room for the unemployment rate to fall even more, according to Elise Gould, a senior economist at the Economic Policy Institute.
In 2017, “the unemployment rate averaged 4.4 percent. But in 2000, the unemployment rate averaged 4.0 percent, and indeed fell below that for five months—with much higher rates of labor force participation and no pronounced acceleration of inflation,” Gould said. “Given that inflation remains below the Fed’s preferred target today, it seems safe to say that the unemployment rate can continue to fall.”
Wages are going up. Average hourly earnings increased in December by $0.09, ending at $26.63. Overall, average hourly earnings increased by 2.5 percent, or $0.65. That’s a good sign for workers — and for Trump, who promised to help working and middle class families.
Where do things stand, 10 years after the start of the Great Recession? Last month’s jobs report was a benchmark for economists, because it came on the 10th anniversary of the start of the Great Recession in 2007. By most measures, the economy has recovered since then, but there are some lingering areas of concern, such as the persistently low labor participation rate.
“This is an indication that there are still workers sitting on the sidelines who would be working or looking for work if job opportunities were stronger,” Gould said. The pre-recession economy in 2007 was not strong, Gould added, “making returning to pre-recession health an inadequate benchmark” when a better goal would be full employment.
It’s too early to know how the tax bill will impact the economy. The law took effect at the start of the month. Already, some companies have said they’ll pay workers more, but the bill’s overall effect remains unclear. For instance, “while the tax cut legislation should provide some benefit to the job market, aiding a variety of sectors and businesses, it does absolutely nothing to help address the nation’s skills gap,” Hamrick said.
What’s the outlook for 2018? Economists will watch several factors, including likely interest rate hikes by the Federal Reserve, and the 2018 midterm elections. “If Democrats take back control of either chamber from the Republicans, the environments surrounding business and financial markets could be in for disruption,” Hamrick said.
Growth over the past year represented “the Obama economy redux,” Holtz-Eakin said. “It sets the stage for a real test of the Trump administration policies in 2018, which should show faster growth in productivity, real wages and Gross Domestic Product.”