Jobs Report: Happy New Year!

The U.S. economic engine continued to churn out jobs in December, generating 292,000 new jobs and keeping unemployment at the “full employment” rate of 5%, the government’s Bureau of Labor Statistics reported Friday.

December job growth was pretty much across the board, with the biggest boosts in professional and business services, construction, health care and food services.

Last month’s job gains followed 252,000 in November and 307,000 in October, totaling a robust 2.7 million new jobs for all of 2015. December highlighted a remarkable 63 consecutive months of job expansion, according to The Wall Street Journal.

To put December’s 5% unemployment rate in context, that key metric soared to 10% in October 2009, as the recession tightened its grip on the job market. The jobless rate has fallen slowly but steadily over the past six years, attaining full employment last October. The nation’s unemployment rate last hit 5% in April 2008 as the Great Recession began. As one indication of the downturn’s virulence, it took only 18 months for the unemployment rate to shoot up from 5% to 10%, but 72 months to come back down to 5%!

Wage growth remained the economy’s Achilles’ heel in December, with average hourly earnings essentially unchanged from the previous month. Though up 2.5% year-over-year, wages are barely keeping up with inflation. Whatever the cause, the sharply tightening labor market has yet to translate into correspondingly higher wages.

While the December and full-year jobs data are significant, perhaps even more important as the New Year begins is what the numbers foretell about 2016.

The good economic news

The U.S. economy clearly has strong job growth momentum heading into 2016. So much so that the Federal Reserve voted in December to begin inching up interest rates. Only an unusual external shock could derail the economy’s upward trajectory.

Economic uncertainty remains

Still, after 63 consecutive months of job gains the nation’s six-year recovery phase from the Great Recession can be expected to slow. The Commerce Department reported December 22 that U.S. real GDP growth slowed in the third quarter to 2 percent from the second quarter rate of 3.9 percent. Fourth quarter growth could come in below 2 percent and many economists forecast 2016 growth stuck in the 2 percent range. In short, 2016 is likely to usher in growth and jobs uncertainty.

But an uncertain future should not dampen enthusiasm about a positive present: the 2014 and 2015 economies unambiguously delivered solid GDP and jobs growth. Full employment has been restored. The U.S. economy is healthy. Happy New Year!