The headline number from the December employment report (link above) was a bit disappointing. The economy added only 148,000 jobs vs. expectations for approximately 191,000 and vs. 252,000 added in November – especially disappointing considering that this was the peak of the retail shopping season. Unemployment held steady at 4.1%. (But not really.)
Look into the details and the report is even weaker. The employment level, a figure taken from the household survey (vs. the establishment survey, which is where the 148,000 jobs figure comes from) rose by only 103,000. But that’s not the worst part. Employment and job creation numbers are meaningless without the context of population. December is the month when the Census Bureau updates its estimate of population (during non-census years). This time around it boosted the population by 549,000 (to just under 327 million people) vs. a normal monthly increase of about 170,000. Of course, the population didn’t jump by that much in December. It just means that the Census Bureau discovered that it has been underestimating population growth during 2017. That means that growth in the labor force has been underestimated for the purposes of calculating unemployment. If the actual size of the labor force was used in the calculation, instead of estimating it based on how many people were looking for work, unemployment actually rose in December by 0.1% to 7.2%, the third consecutive increase in that number. And per capita employment has fallen for the third consecutive month. Check the chart: Per Capita Employment. And the number of unemployed Americans rose for the third consecutive month to over 12 million. Here’s the chart: Unemployed Americans.
Enthusiasm over the Trump administration’s policies will only carry the economy so far. Without the kind of meaningful trade policy reform that Trump promised during his campaign, it’s going to stall out. This data may be an indication that that’s beginning to happen.