Recession? What Recession?

08:28 01/07/2019

It appears the U.S. economy didn’t receive the “recession memo.” In fact, there’s no recession in sight after the latest jobs report after all. While many economists predicted a near-term U.S. recession, many may want to rethink that idea, especially with a blowout December 2018 jobs report. The U.S. economy added another 312,000 jobs – suggesting the economy is on more solid footing that many thought. That brings total employment gains in 2018 to a three-year high of 2.64 million. “The far bigger than expected 312,000 jump in non-farm payrolls in December would seem to make a mockery of market fears of an impending recession," Paul Ashworth, chief economist at Capital Economics, as quoted by Business Insider. Granted, the unemployment rate did jump to 3.9% form a 49-year low of 3.7%. But that’s because more people entered the workforce in search of jobs. Meanwhile, economists had expected for the pace of hiring to have slowed in December to just 17,000. Instead, they got quite a surprise, as the U.S. added the highest number of jobs since February 2018. Even better, November 2018 jobs were revised higher from a gain of 155,000 to a gain of 176,000. October 2018 was also revised higher from a gain of 237,000 to a gain of 274,000. After all revisions, jobs gains averaged 254,000 per month for the last quarter of 2018. “This is the strongest employment report of this economic cycle -- hands down. While we've seen greater job gains in some months, the plus-300,000 number along with another increase in average hourly earnings clearly signals that the economic expansion ended 2018 on strong footing. Perhaps most surprising was the two-tenths rise in the unemployment rate due to an increase in participation,” as quoted by Bloomberg economist Tim Mahedy. Employment in health care rose by 50,000 in December. Employment in food services and drinking places increased by 41,000. Construction employment rose by 38,000. Manufacturing added 32,000 jobs in December. Retailers added 24,000 jobs. Wage growth accelerated higher, too. Average hourly earnings jumped 3.2% year over year, matching the fastest pace since 2009. "The secret sauce here is probably wage increases. Rising wages paired with weakening inflation mean real wages are rising strongly and that's pulling more people into the workforce," said Robert Frick, corporate economist with the Navy Federal Credit Union, as quoted by CBS News. "This could boost the economy this year, as more disposable income means more consumer spending.” While others may fear a slowdown and recession, we see no clear signs of that happening. Instead, the U.S. economy is likely to continue its strong growth trend.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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