December Job Numbers are Lower Than Expected. Now What?

The Federal Reserve Bank in Washington DC

WASHINGTON, DC–December only saw 156,000 jobs added to the nation’s payrolls, according to the US Labor Department, along with a slight uptick of the unemployment rate to 4.7%, from 4.6%. The number of jobs created last month were somewhat less than expected with economists expecting around 175,000 positions. The kicker, though, in this morning’s report is this: Average hourly earnings increased 10 cents or 0.4%, following a 0.1% drop in November. The year-on-year increase in average hourly earnings was 2.9%, the biggest jump in seven years. Translation: wage growth is speeding up, perhaps faster than expected.

In the past, lackluster economic news caused the Fed to hold off on monetary policy changes.  This time, though, it is highly unlikely the Federal Reserve will start dithering again on its plan to raise the federal funds rate . With wage growth comes inflation and one of the markers, or signals, the Fed has been looking for is inflation growth.