Labor Market Remains Tight, But Not for Long
Despite the Fed's aggressive interest rate hikes and stubborn inflation, the labor market remains tight. The unemployment rate is sitting at a historical low of 3.7% and average hourly earnings rose 5% year-over-year, "well above a pace that would be consistent with the Federal Reserve's 2% inflation goal," reads an article from Bloomberg.However, applications for unemployment aid for the week ending Dec. 24 ticked slightly upward, climbing 9,000 to 225,000, the Labor Department reported Thursday. "The four-week average of applications, which smooths out some of the week-to-week swings, slipped just 250 to 221,000," the report reads.
Unemployment is expected to rise further in 2023 as the Fed seeks to "slow job growth and the pace of wage increases as part of its efforts to battle inflation," reads an article from ABC News. Yet, so far there has been only a limited impact on hiring. Employers added 263,000 jobs in November, "a healthy gain, and the unemployment rate stayed at a low 3.7%."
Payrolls are projected to have risen by about 200,000 in December, according to government data to be released Friday. "While that would mark a declaration from the prior month, that pace of job growth still points to solid hiring and an overall robust labor market," the article reads.