Labor MarketMacroeconomics

Strong Labor Market Continues

December 8, 2023 · by Brian Dew

The strong labor market continued in November, according to this morning’s jobs report. The US added a net total of 199,000 jobs in the month and unemployment ticked lower to 3.7 percent.

Employment levels are currently above Congressional Budget Office (CBO) projections from before the pandemic and far above CBO projections from before the American Rescue Plan (ARP). Mike Konczal had a great chart showing this result, which is replicated below.

Line chart of US nonfarm payrolls in millions, Jan 2020 to late 2023. Actual employment drops from 152M to 131M in April 2020 then recovers to 157M by late 2023, surpassing both the CBO pre-COVID projection (~155M) and the pre-ARP projection (~152M). Sources: BLS, CBO.

The strong labor market is even more impressive in the context of moderate inflation. The Cleveland Fed inflation nowcast suggests the all-items CPI was unchanged in November, which would be the second consecutive month with no change to the CPI, and correspond to a 12-month inflation rate of 3.0 percent. The combination of low unemployment, high interest rates, and moderate inflation should have many economists reconsidering their models.