The U.S. job market ended 2023 with a flourish, defying the Fed’s hawkish hikes and etching its name in history with rock-bottom unemployment. December saw employers add another 216,000 jobs, keeping the unemployment rate steady at an enviably low 3.7%. This marks the longest stretch of sub-4% unemployment since the Vietnam War, proving the American worker’s tenacity even in the face of economic headwinds.
Resilience is the word of the year for U.S. jobs. While the growth pace cooled compared to the pandemic rebound’s frenzy, 2023 still delivered 2.7 million new jobs, surpassing every year since 2015. This resilience shines brighter against the backdrop of the Fed’s aggressive interest rate hikes aimed at taming inflation. Even sectors sensitive to borrowing, like construction (up 17,000 jobs in December!), kept hiring, painting a picture of a robust and adaptable job market.
Nancy McNamara, a recent building trades intern in Rutland, Vt., is a testament to this adaptability. Snagging a job with a busy weatherization contractor right out of her internship, she embodies the optimism pulsating through the construction industry. “He’s booked solid,” she says of her employer, “I feel like every time we’re at a job site, he’s getting calls from someone else!” Her story echoes the hunger for skilled labor driving hiring sprees across various sectors.
However, not all industries are basking in the full sun of this jobs bonanza. The leisure and hospitality sector, still recovering from pandemic wounds, added 40,000 jobs in December but remains shy of pre-pandemic levels. Similarly, government jobs, slow to bounce back initially, finally regained lost ground in 2023 thanks to strong hiring efforts.
Wages, while rising, are doing so at a slower pace than earlier in the year. Average December wages were up 4.1% from a year ago, a welcome slowdown for inflation hawks at the Fed. This tamer wage growth reduces upward pressure on prices, potentially easing their concerns about a dangerous wage-price spiral in 2024. For workers, it translates to bigger paychecks outpacing inflation, offering some financial breathing room.
The U.S. job market stands at a crossroads in 2024. Will the Fed’s tightening measures finally crack its resilience, or will it continue its upward march? One thing’s for sure even with its Vietnam-era record, the American job market remains a dynamic force, its future trajectory a captivating story unfolding in real-time.