Job growth not super, won’t bowl over Fed

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Released on the eve of Super Bowl weekend, the government’s January jobs report doesn’t mark a shutout for workers, but few are spiking the football after this report either.

Hiring continued at a moderate pace last month in the face of a world of troubling economic news.  The unemployment rate slipped to the lowest level since early 2008, to 4.9%, but hiring was shy of expectations, with 151,000 jobs added to payrolls. Amid financial markets volatility, slumping crude oil and commodities prices and sharp appreciation of the dollar, there has been no shortage of excuses to give employers pause when it comes to their hiring plans. But this report shows they haven’t stomped on the brakes or broadly opted for job cuts — at least, not yet.

We knew that the job gains in December and in the fourth quarter of last year would be tough to match. December’s previously reported payrolls number was revised down from 292,000 to 262,000, but November hiring was adjusted higher by a nearly equal amount.

Even with the modest reassurance we’ve received thanks to this January hiring snapshot, questions will remain in 2016 and beyond about the sustainability of the U.S.’s economic recovery.

Waiting for wages

The main gauge in this report of wage growth, average hourly earnings, posted a modest annual gain of 2.5%. The major criticism of the job market hasn’t been so much about the level of hiring as it has been about the lack of wage gains. There’s still a lot of ground to make up all these many years into the recovery. Signs of stress remain below the headline numbers. Little changed since last summer, the number of long-term unemployed (those jobless for 6 months or longer) stood at 2.1 million Americans. And then there are the “underemployed”: some 6 million people working part-time who would like full-time work.

The Fed’s dashboard

Many economists believe that the Federal Reserve will not be raising interest rates again in March, when the Federal Open Market Committee is slated to meet again. Federal Reserve Bank of New York President William Dudley was recently quoted as saying that financial conditions had tightened since the central bank hiked rates in December.  Whatever the Fed’s current view, this jobs report by itself wouldn’t appear to be enough to force a radical revision.

“This report is neither strong enough nor weak enough to materially impact the Fed’s rate decision in March, which at this point still looks like a decision to hold,” says National Association of Federal Credit Unions chief economist Curt Long.

Fortunately for the Fed governors, they will get another monthly jobs report before the March meeting to help them get a read on country’s economic health.

Populist anger reflected in politics

In the current political environment of surging populism, it seems unlikely that even respectable job gains will change many Americans’ perceptions about where the economy stands now, or might be headed in the future. Their concerns about their ability to improve their own economic standing and the disappointment that they haven’t done better this many years removed from the financial crisis have remained throughout this period of relatively strong growth.

That’s not likely to change anytime soon. With the current composition of Congress at loggerheads with the president, it seems there’s little chance that the economy will get an assist from any kind of legislation. Perhaps the only safe bet is that government will remain divided in Washington, perhaps even after the general election and into 2017.

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