Ball State Economist: December Jobs Report Shows Big Losses, Volatile Labor Markets

Again disappointed

The December Jobs Report released today “again disappointed,” according to Dr. Michael Hicks, director of the Center for Business and Economic Research at Ball State University. He notes only 199,000 new jobs were created, when the consensus estimate was 447,000 new jobs. Labor demand and supply also continue to adjust as workers and businesses look for a good match, Dr. Hicks added.
 
“This jobs report signals higher wage costs that are not matched by large employment gains,” Dr. Hicks said. “This complicates discussion about raising interest rates to reduce inflationary risks.”
 
Here are Dr. Hicks’ full takeaways from the December Jobs Report. If you have any interest in connecting with Dr. Hicks beyond these comments, please reach out to me and I will be happy to try to facilitate an interview. Thanks!
 
• Today’s job reports reflects data collected in early December. This followed closely on the heels of weak job growth figures. However, each of the past few months have been revised upwards significantly. The undercount seems to be caused by undersampling of newly created firms and changes to seasonal adjustment not yet captured by the algorithm used by the Department of Labor.  

• The December jobs report released today again disappointed, with only 199,000 new jobs created, when the consensus estimate was 447,000 new jobs. However, as I said last month, we saw very large revisions to earlier reports, adding 141,000 jobs to the October and November reports. Both of these reports were from a survey of businesses.

• Unfortunately, the household survey showed big job losses, of 483,000 in December, but with labor force growth of 170,000 jobs.

• Wages were up 4.68 from December 2020, but accelerated in December growing at an annualized 7.3 percent in December, suggesting continued strong demand for workers.  

• Bottom line, labor markets continue to be volatile, with significant turnover apparent in other data from the BLS (the Job Opening and Labor Turnover Survey), which report record quits from America’s workers. Labor demand and supply continue to adjust as workers and businesses look for a good match.

• This jobs report signals higher wage costs that are not matched by large employment gains. This complicates discussion about raising interest rates to reduce inflationary risks.