The government’s Bureau of Labor Statistics (BLS) announced today that in January the U.S. unemployment rate was essentially unchanged from December at 5.7%, edging toward national full employment, and an impressive 257,000 new jobs were created, continuing last year’s healthy pace and suggesting solid economic momentum to kick off 2015.  

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Breaking News on U.S. Jobs: 2015 Off to Great Start

Fri Feb 6, 2015

The government’s Bureau of Labor Statistics (BLS) announced today that in January the U.S. unemployment rate was essentially unchanged from December at 5.7%, edging toward national full employment, and an impressive 257,000 new jobs were created, continuing last year’s healthy pace and suggesting solid economic momentum to kick off 2015.

But it was revisions to jobs numbers estimated for late last year that caught economists by surprise: November’s job gains were revised upward by 70,000 to 423,000 and December’s up by 77,000 to 329,000 new jobs. November’s jobs burst was the strongest hiring pace in almost 20 years, according to the Wall Street Journal.

And speaking of 20 years, the Washington Post reports that the U.S. economy has added 200,000 or more jobs in each of the past 12 months, the first time that’s happened since 1994-1995.

The good news is sure to be encouraging not only to Americans but to beleaguered Europeans, whose job prospects remain dim and who hope the United States can once again become the engine of global economic growth.

While the U.S. has seen its unemployment rate drop consistently from 10% in 2009 into the 5%+ range, Europe continues to flounder, with unemployment last year at 25% in severely depressed Greece, 23% in Spain, 13% in Italy, 10% in Ireland and 10% in France. Indeed, as the U.S. jobs picture gets better and better Europe’s seems to get worse and worse.

Of course, silver linings come with clouds and soft wage growth and “underemployment” still cloud the good jobs news. Economists believe in the laws of supply and demand: as labor markets tighten, i.e., the unemployment rate approaches 5%, wages must rise. But earnings growth has barely kept pace with inflation, up only 2.2% over the past year according to BLS, perhaps because health benefits costs are driving overall compensation.

Stagnant wage growth has been the Achilles Heel of the economic recovery since 2009. Inflation-adjusted median income in the U.S. today is actually lower than twenty years ago. There’s no consensus on why wages have remained so sticky but unless the laws of supply and demand have been repealed wages should begin to spurt as the unemployment rate closes in on 5%.

The other cloud has been underemployment—those working part-time involuntarily (6.8 million) and those who are “marginally attached” to the labor force, meaning they recently stopped looking for work but did actively seek employment within the last 12 months (2.2 million).

Measured this way, the number of unemployed and underemployed totaled almost 18 million people in January, implying that “unemployment” may be higher than the official figure.

Be that as it may, the trend is very much in the right direction and far better than the rest of the world. U.S. job creation is accelerating, unemployment is falling rapidly and wage growth can’t be far behind.

The January jobs report tells us that of course things could be better; that they could be and have been worse during the disappointing recovery from the Great Recession of 2009. But all things considered, the U.S. economy is growing stronger, the job market is surging and the outlook is promising. 2015 is off to a great start!