Commentary The U.S. December jobs report shows that the labor market remains weak. The headline 3.9 percent unemployment rate looks positive, but job creation fell significantly below consensus, at 199,000 in December versus a consensus estimate of 450,000. The weak jobs figure should be viewed in the context of the largest stimulus plan in recent history. With massive monetary and fiscal support and a government deficit of $2.77 trillion, the second highest on record, job creation is falling significantly short of previous recoveries, and the employment situation is significantly worse than it was in 2019. The most alarming data point is that real wages are plummeting. Average hourly earnings have risen 4.7 percent in 2021, but inflation is 6.8 percent, sending real wages into negative territory and the worst reading since 2011. The number of persons not in the labor force who currently want a job didn’t change in December, …
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