Steady Job Growth Leads to Financial Security
The economy added a better than expected 225,000 jobs in January and with revisions to the two prior months, the three-month average is 211,000, a strong showing for the eleventh year of an expansion. There may be an asterisk on this report, though. According to Diane Swonk, Chief Economist at Grant Thornton, “a large portion, about 20 percent, of the January gains were in the most weather-sensitive sector, construction,” and “the January survey was taken well before any blows to employment due to the coronavirus.”
The Labor Department also released its final annual revisions (the government analyzes company tax records and payroll data to better pinpoint previous employment data) for jobs created from April 2018 to March 2019, which showed 514,000 FEWER jobs than initially reported. For all of 2019, employers added 2.096 million jobs (175,000 per month on average) and in 2018, the increase was 2.31 million (193,000 per month), down from the originally reported 2.68 million.
These numbers were expected after the preliminary estimate last summer, but they underscore how interpreting employment trends in real time can be difficult. In looking back on annual totals, the remarkable aspect is how consistent the labor market has been.
Meanwhile, the unemployment rate edged up from a 50-year low of 3.5 percent to 3.6 percent, as more people entered the labor force in search of work and wages were up 3.1 percent from a year ago, below the peak seen early last year, but still a full percentage point ahead of the inflation rate.
The broad measure of unemployment (“U-6”, which includes unemployed; discouraged and marginally attached workers; and those who are working part-time, but seek full time) edged up to 6.9 percent from a 19-year low of 6.7 percent. That rate was 8.8 percent a year ago.
STEADY JOB GROWTH LEADS TO FINANCIAL SECURITY
How we feel about our personal financial security is inextricably linked to the labor market, much more so than the stock market. According to Gallup, 59 percent of Americans say they are currently better off financially than they were a year ago, up from 50 percent last year. That’s the best result that the organization has seen since January 1999. As a frame of reference, from 2001 to 2018, the percentage saying their personal finances were better off than the previous year was mostly under 50 percent, with a low of 23 percent in May 2009, during the Great Recession. Respondents also feel cheery about the future, with 74 percent predicting they will be better off financially a year from now, the highest in Gallup's trend since 1977.