Dean Baker on today's jobs report. Not his concluding paragraph:
Economy Adds 321,000 Jobs, Strongest Gain in Almost Three Years: Over the last three months wages grew at a 1.8 percent annual rate.
The economy added 321,000 jobs in November, the strongest gain since it added 360,000 in January of 2012. With upward revisions to the prior two months data, the average job gain over the last three months has been 275,000. The household survey showed unemployment unchanged at 5.8 percent, with the employment-to-population ratio (EPOP) also unchanged at 59.2 percent.
The gains were widely spread across sectors. ...
Other news in the establishment survey was also positive. The average workweek increased by 0.1 hour to 34.6, the longest since May of 2008 and wages reportedly rose by 9 cents. The one-month jump was in large part an anomaly; over the last three months wages have risen at just a 1.8 percent annual rate compared with the prior three months. There is little evidence of any wage acceleration in any major sector.
While the overall employment and unemployment numbers changed little in November, there was some positive news in the household survey. The number of people involuntarily employed part time fell by 200,000. It is now almost 900,000 below the year-ago level. By contrast, the number of people voluntarily choosing to work part-time rose by 297,000. It is now more than 1 million higher than the year-ago level. This is almost certainly the result of the Affordable Care Act, which has allowed people to get insurance outside of employment so that many people no longer have to work full-time jobs to get insurance for themselves or their families.
In another positive sign, the percent of the unemployed who had voluntarily quit their job rose to 9.1 percent. This measure of confidence in the labor market is at its highest level in the recovery, albeit well below the 11-12 percent range in the pre-recession period. The median duration of unemployment spells and the share of long-term unemployed both fell to their lowest level in the recovery, although the average duration rose slightly. Black teen employment rate rose to 21.8 percent, the highest since January of 2008, while unemployment fell to 28.1 percent, the lowest since April of 2008.
Interestingly, the recovery seems to be disproportionately benefiting workers with less education. Over the last year, the unemployment rate for workers without a high school degree fell 2.1 percentage points and for workers with just a high school degree by 1.7 percentage points. By contrast, the unemployment rate for college grads has only dropped by 0.2 percentage points. The unemployment rate for college grads is still more than a percentage point above its pre-recession level.
Overall, this is a very positive report, but it still must be understood in the context of the hole created by the downturn. It would take two and half years at this growth rate to restore demographically adjusted pre-recession levels of the employment to population ratio.
Paul Krugman issues a warning:
On Not Counting Chickens: A genuinely good employment report this morning... But — you knew there would be a but — good news can turn into bad news if it encourages complacency.
There will, predictably, be calls to respond to the good news by normalizing monetary policy, raising interest rates soon. And we will want to raise rates off zero at some point. But it’s important to say that (a) we are still highly uncertain about the underlying strength of the economy (b) the risks remain very asymmetric, with much more danger from tightening too soon than from tightening too late. ...
So still: the Fed should wait until it sees the whites of inflation’s eyes — and by inflation I mean inflation clearly above 2 percent, and if I had my way higher than that.