November Jobs Report: U.S Enters Holiday Shopping Season with Vigor and Optimism
Dr. Bernard E. Anderson
Whitney M Young, Jr. Professor Emeritus, The Wharton School, University of Pennsylvania
Senior Economic Advisor, National Urban League
The economy added 263,000 jobs in November, indicating a strong, but unbalanced labor market with wages rising at a rate that sustains strong consumer spending.
The overall unemployment rate remained unchanged at 3.7%, but the demographic pattern of employment trended in opposite directions in November. Black employment rose while white employment declined; as a result, the Black /white unemployment disparity slipped down from the persistent 2:1 ratio to 1.78.
The pace of employment growth was similar to growth over the prior 3 months, which averaged 282,000. Monthly job growth over the entire year 392,000, down from an average of 562,000 per month in 2021. Most employment growth in leisure/hospitality, the industry that lost most jobs when the pandemic hit in early 2020.
Health care continues to be a major job creator with strong employment gains in ambulatory care (+23 000), hospitals (+ 11,000) and nursing homes (+ 10,000).
In the non-service sector construction employment trended up (+20,000), concentrated in non-residential building (+ 8,000 jobs). Manufacturing employment growth differed little from the monthly average in 2021. Employment in financial activities trended up (+ 14,000) while retail trade employment fell by 30,000 in November. There was little evidence of accelerated hiring in advance of the holiday shopping season. There was little change in employment in other major industries.
Post-thanksgiving Black Friday sales were estimated at 2.7% higher than the same period last year. Sales were brisk for both discount and non-discount products.
The economy continues to recover from the pandemic-induced contraction, with the GDP rising 2.9 % in the third quarter of 2022, reversing the modest decline in growth during the first half of the year.
The Federal Reserve continued to raise the federal funds rate to bring inflation down to the 2% long-term target.
The persistence of inflation is exacerbated by tight labor markets. Labor shortages are reported by employers in a wide range of industries. Job openings exceed hiring, forcing employers to raise wages to retain workers and draw others off the sidelines. The labor force participation rate remains unchanged. Many baby boomers retired, the population growth rate is down, and many young adult workers 18 to 25 have delayed their entry into the workforce.
The outlook for 2023 depends on the effectiveness of high interest rates in reducing inflation. Current trends in business activity suggest a downside risk if a short, shallow recession in 2023, with actual economic growth below potential growth. A return to stable economic growth requires getting inflation under control and increasing the size of the workforce.