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More than 300,000 jobs were created in December, doubling what was expected and signaling that the U.S. economy remains stable despite the recent market volatility and political tensions. In addition, wage growth was the highest it’s been in a decade. Amna Nawaz speaks with Mark Zandi, chief economist at Moody’s Analytics, for more on why this report contained “nothing but good news.”
It has been a big day and a big week with economic news that has led to some wild swings in the financial markets. Today alone was full of news about jobs, the Fed, interest rates, China and a big jump on stock exchanges.
Amna Nawaz speaks with someone who will try to explain what it all adds up to.
Stocks did surge on that very strong jobs report and the comments by Federal Reserve Chairman Jay Powell.
The economy added more than 2.6 million jobs in 2018. That makes it the third best year for job growth since the recession and dating back to 2000. Only 2014 and 2015 were higher.
We dive into all of this with Mark Zandi, chief economist at Moody's Analytics.
Mark Zandi, welcome back to the "NewsHour."
So you heard earlier 312,000 new jobs added in December. This all good news in this report?
It's pretty good news, yes.
That's a lot of jobs. We also got upward revisions to previous months. And perhaps the best news is wage growth. Wage growth accelerated and we're seeing the strongest wage gains in over a decade. So, this report had nothing but good news in it.
We, at the same time, saw unemployment tick up just slightly, right, to 3.9 percent. How do you factor that in?
Well, that's only because we saw a lot of people come into the work force looking for work. They know that there are a lot of job opportunities. In fact, there are a record number of open job positions today, and wages are up, so it's a good time to go out there and look for a job.
So when you more people looking for work, that pushes the unemployment rate up. So it rose, but it rose for the right reasons.
So, there are all these lingering concerns over the last few months, concerns about trade tensions, that interest rates going up could slow the economy down.
Does this last report quiet those fears?
No. Those are still very much fears. And I do think there's some red flags.
The president's trade war is certainly doing economic damage to China, rest of the globe, and it's reverberating back on us. The government shutdown, if that goes on, that's going to be an issue. All of the political discord in Washington, at some point, I think, will be a problem for the job market.
And, of course, those tax cuts we got last year, the benefits of that are now starting to fade. And so we are going to see slower growth going — going forward. And there are a significant number of risks out there.
So let me ask you about something we heard from the Federal Reserve chairman earlier today.
He said that he's going to be patient with another interest rate hike. What do you think that kind of language, what effect will that have in the immediate future?
Well, it had a big effect today, right? So the stock market was way up today, in part because of those strong job numbers, because it dispels the fear that we're going to be in a recession anytime soon.
But we also got these comments from Fed Chair Powell. And, basically, what he's telling investors is, look, if the economy is really going to weaken here, I'm not on autopilot. I'm not going to keep raising interest rates. I will stop raising interest rates.
And, of course, that's music to investors' ears, and that's why the stock prices rose. So, it's already had some benefit. And so the Fed chair is really focused on making sure that stock investors don't lose faith and cause this economy — do we get into a self-fulfilling prophecy where stock investors take the economy down?
I got to ask you about something else he said.
He did respond, basically, to repeated criticism from the president himself. And he said he would not resign, even if the president asked him to.
Do we have any indication that there was any political pressure at all for Fed Chairman Powell to say he's going to be patient with rate hikes or to come out and say something so expressly about his potential resignation?
No, I don't — I don't see that at all.
I mean, of course, the president's comments and his threats to fire the Fed chair are very counterproductive. A pillar of a well-functioning economy is an independent central bank. This is something that we have learned from time immemorial.
And for the president to attack the Fed chair in this way is really not in anyone's best interest. So I don't think the Fed chair is going to be swayed by these comments in any way. That's basically the message he was sending. He was saying, look, I — if the president asks me to resign, I'm not doing it.
He's stating his independence.
You know, we talked about this earlier in the week, but I want to put it in the context of our conversation today. And that's the focus on Apple and what we saw from them.
They sparked concerns, right, by downgrading their revenue estimates. And it looks like this once unshakable giant was shaken by those same troubles in China. Is that indicative to you of something else, something broader that could happen across the markets? Or is Apple its own case?
Well, no, this goes to one of those red flags. That's the president's trade war. It really is doing damage.
And it's — Apple is the iconic American company. Apple said that its earnings were hurt because of poor sales in China. And, of course, China is struggling because of this trade war. So, here's the thing. The U.S. economy and the Chinese economy, we're tethered at the hip.
So if the Chinese economy struggles, we struggle. And you can see that with Apple's earnings. And it's not just Apple. All large multinational corporations in the United States do big business in China and the rest of the world.
And if China's struggling, we're going to struggle. So Apple's problems are symptomatic of the ill effects of this ill-timed and ill-conceived trade war.
All right, a lot to watch moving forward, then, in the markets.
Mark Zandi from Moody's Analytics, thanks for your time.
Thanks so much.
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