Current:Home > InvestHiring is booming. So why aren't more Americans feeling better?-Angel Dreamer Wealth Society D1 Reviews & Insights
Hiring is booming. So why aren't more Americans feeling better?
View Date:2024-12-23 22:20:59
Friday’s blockbuster jobs report, highlighted by a stunning 353,000 payroll gains last month, again pointed up a nagging question: If the economy and labor market are so strong, why aren’t more Americans feeling it?
To be fair, people are feeling better than they have been in the past couple of years. Consumer sentiment in January jumped to the highest level since July 2021 on easing inflation and rising incomes, according to a University of Michigan index that was also released Friday.
But the closely watched gauge is still well below its pre-pandemic level and a tad short of its long-run average.
Keep in mind the January job gain wasn’t a blip. Job growth in November and December was revised up by a total of 126,000, meaning an average 289,000 jobs a month have been added since November. And the average 255,000 monthly increase last year is down from 399,000 in 2022 but still robust.
So what gives?
Inflation, inflation, inflation
Sure, Americans like seeing nice headlines about vigorous hiring.
But, “Consumers hate inflation,” says John Leer, chief economist of Morning Consult, a research firm that conducts a monthly consumer confidence survey. And while monthly job tallies can seem abstract, people feel the effects of high prices in their wallets.
But hasn't inflation been slowing while wages increase sharply?
Yes. Wage growth has outpaced inflation since the spring of last year, meaning workers’ inflation-adjusted pay has been rising after falling for many months. Last month, average yearly wage growth ticked up to 4.5% from 4.3%, according to the jobs report.
And by some measures, total average pay increases have caught up to and topped total price gains since the inflation run-up began in mid-2021. In other words, Americans on average now have more purchasing power than they did, according to a recent Treasury Department study.
Then why aren't more consumers smiling?
Shoppers see gasoline and supermarket prices every day. They don’t necessarily see or think about their paychecks, Leer says. And while price increases have slowed, most prices aren’t coming down.
“It takes a while for (higher but stable prices) to flow through” to how Americans think about their financial situation, Leer says.
The Federal Reserve’s preferred annual inflation measure was at 2.6% in December, below the 7% high in summer 2022 but above the Fed’s 2% goal.
Even after inflation drifts down to 2%, “There’s a very serious risk that we could get inflation under control," but because prices themselves won't be coming down "people will still feel downbeat.”
What is boosting consumer confidence?
A record stock market, fueled by the prospect of Fed rate cuts this year, and relatively low gasoline prices have propelled sentiment higher, says Ian Shepherdson, chief economist of Pantheon Macroeconomics.
The outlook of higher-income Americans who are heavily invested in the market through stocks or mutual funds has significantly improved, Leer says.
But a much larger number of lower-income households are still burdened by record credit card debt and delinquencies that hover at a 13-year high. As income gains outpace inflation, the mood of that group also has started to improve but it will take time before they feel a big difference, Leer says.
Also dampening sentiment: Interest rates are still high and pandemic-related savings are dwindling, says Grace Zwemmer, economic research analyst at Oxford Economics.
Fed officials have signaled they will lower interest rates this year as inflation declines further. But they indicated this week the first cut likely won't happen for at least several months.
Shouldn't Americans at least be feeling good about the job market?
Yes, but job growth overall has cooled over the past year. There are fewer job openings but still lots of candidates job hunting, making it more challenging to find a position.
And although 353,000 jobs were added last month, the number was pumped up a bit by seasonal adjustments. Since fewer temporary holiday workers were hired by retailers this past holiday season, fewer were laid off in January. That resulted in a seasonally adjusted gain of 45,000 jobs in retail even though the industry actually shed jobs.
And most workers’ outlook is affected more by news about layoffs than job gains, Leer says.
Recently, companies such as UPS, Google, Amazon and Microsoft have announced thousands of layoffs, though job cuts overall remain low.
Employees, he says, like stability.
“We’re not in a stable period right now,” he says.
veryGood! (87328)
Related
- Florida Man Arrested for Cold Case Double Murder Almost 50 Years Later
- Why Amanda Seyfried Traded Living in Hollywood for Life on a Farm in Upstate New York
- Sports are a must-have for many girls who grow up to be leaders
- Kelly Rowland and Nelly Reunite for Iconic Performance of Dilemma 2 Decades Later
- Martin Scorsese on faith in filmmaking, ‘The Saints’ and what his next movie might be
- Brush fire erupts in Brooklyn's iconic Prospect Park amid prolonged drought
- Man killed in Tuskegee University shooting in Alabama is identified. 16 others were hurt
- CRYPTIFII Introduce
- US Congress hopes to 'pull back the curtain' on UFOs in latest hearing: How to watch
- Trump on Day 1: Begin deportation push, pardon Jan. 6 rioters and make his criminal cases vanish
Ranking
- Burt Bacharach, composer of classic songs, will have papers donated to Library of Congress
- Vikings' Camryn Bynum celebrates game-winning interception with Raygun dance
- Michael Jordan and driver Tyler Reddick come up short in bid for NASCAR championship
- Brian Kelly asks question we're all wondering after Alabama whips LSU, but how to answer?
- Judge recuses himself in Arizona fake elector case after urging response to attacks on Kamala Harris
- MLS playoff teams set: Road to MLS Cup continues with conference semifinals
- Vikings' Camryn Bynum celebrates game-winning interception with Raygun dance
- 'He's driving the bus': Jim Harbaugh effect paying dividends for Justin Herbert, Chargers
Recommendation
-
Mississippi Valley State football player Ryan Quinney dies in car accident
-
Rita Ora Says Liam Payne “Left Such a Mark on This World” in Emotional Tribute
-
World War II veteran reflects on life as he turns 100
-
Trump breaks GOP losing streak in nation’s largest majority-Arab city with a pivotal final week
-
Taylor Swift Politely Corrects Security’s Etiquette at Travis Kelce’s Chiefs Game
-
Ashton Jeanty stats: How many rushing yards did Boise State Heisman hopeful have vs Nevada
-
Utah AD Mark Harlan rips officials following loss to BYU, claims game was 'stolen from us'
-
Younghoo Koo takes blame for Falcons loss to Saints: 'This game is fully on me'