December Jobs Prints Well, but …
Commentary
The December jobs report showed that the economy added 223,000 new jobs, somewhat better than the consensus estimate of 203,000 jobs. This morning’s print is 33,000 fewer jobs than were created in November 2022 and 384,000 fewer jobs than were created in the COVID recovery period of December 2021. Net revisions for October and November resulted in 28,000 fewer jobs in the last three months. (It is generally believed that 200,000–250,000 jobs are required to accommodate population growth.)
The jobs print, 9.8 percent-plus more than was expected and puts Fed rate hikes in question. Many are expecting a possible pause, but others are expecting ongoing rate hikes. Much will depend on how next week’s inflation figures print. We are of the view that we are likely to see continued rate hikes from the Federal Open Market Committee, the policy-making arm of the Federal Reserve, until there is a tipping point that indicates inflation is on a clear glide path toward the Fed’s preferred target of 2 percent. As we wrote back in October, we think the terminal rate is around 5.5 percent, give or take a quarter point….