Wall Street is betting the U.S. added more than a half-million new jobs in November, potentially cajoling the Federal Reserve to end a massive economic-stimulus strategy faster than planned.
Here’s what to watch in Friday’s employment report.
The forecast …
The number of new jobs created in November likely rose by 573,000 from 531,000 in October, according to economists polled by The Wall Street Journal.
Companies are raising wages and have been more aggressive in hiring, the thinking goes. Delta cases have also leveled off and the expiration of extra unemployment benefits in September should push more people to look for work, experts say.
Maybe so. But it could take the U.S. a year and a half to return employment to precrisis trends even the economy continued to average 500,000 new jobs a month. The labor crunch isn’t going away soon.
The official unemployment rate is seen edging down to 4.5% from 4.6%. Believable? Not entirely.
The jobless rate still isn’t capturing all the people who are really unemployed. Nor does the official figure include the millions of people who dropped out of the labor force and are not counted in the unemployment rate.
Economists suspect the true unemployment rate is a few points higher. But not because jobs are scarce. Job openings are near a record high and Americans say the labor market is as good as ever.
Labor force growing?
The lasting damage from the pandemic is most evident in the depressed percentage of able-bodied civilians 16 or older in the labor force. The so-called participation rate fell to a 47-year low of 60.2% in 2020 and has barely budged in the past year.
Before the pandemic the rate stood at 63.4%.
Economists predict more people entered the labor force in November, but the worst labor shortage in decades will persist — and hold back the economic recovery — until more many people resume working or looking for work.
Wages and inflation
Workers are benefiting from the labor shortage, all right. Wages are rising sharply. Average hourly pay has jumped 4.9% over the past 12 months and a similar reading in expected in November.
The downside? Rising wages are feeding into the biggest surge in U.S. inflation in 31 years. So the cost of living is increasing faster than the amount of money Americans earn.