The Higgins Report: Jobs Up, Inflation Down

The November numbers bode well for consumers

By Joe Higgins, Quest 4 Quality

  • The economy created 199,000 jobs in November, against expectations of 175,000
  • The unemployment rate dropped to a three-month low of 3.7% from a high of 3.9% in October
  • The CPI was up 0.1% in November and 3.1% for the year

The U.S. economy was still red hot in November, creating 199,000 jobs against expectations of 175,000. Overall unemployment fell to 3.7%, a three-month low, with job growth showing strong momentum as we head toward 2024. Economists will call this a slowdown, but 200,000 jobs in one month is still an over-the-top performance. 

This increase is partially due to the return of autoworkers, actors, writers, healthcare workers and everyone else who had been on strike since September. It also reflects a moderation of the crazy pandemic-driven hiring hysteria that has been going on for the past three years. 

The unemployment rate averaged 3.5% for all of 2023; the last time that happened was 60 years ago. This scenario has created a job market that helped raise the average wage of workers and allowed Americans to search for and move to better-paying jobs. Indeed, quit rates reached their highest levels in two years.

The concern is that most of the gains in November came from only two sectors of our economy: government and healthcare, which together added 127,000 jobs. The November employment report would make it appear that other parts of our economy are either not performing or are at least slowing down. However, when you consider the third-quarter GDP, which came in at an astonishing 5.2%, it would suggest that these job gains are part of a more significant trend —that of a growing economy. 

Prepare for Landing

The November jobs report is also good for the central bank’s efforts to reduce inflation. For the past two years I have been predicting a “soft landing,” defined by the Federal Reserve as reducing consumer spending and private lending and raising unemployment without causing recession. All my presentations and articles have taken this position, and I am more convinced than ever that a recession is not in our future. 

GDP is going gangbusters; mortgage rates have dropped nearly a point in the past 30 days; retail sales have been positive for 12 consecutive months; the unemployment rate is at a 50-year low; and the Conference Board’s Consumer Confidence Index stands at a solid 102.1. And all this after 22 months of rising interest rates that were designed to slow down an overheated economy. 

If those numbers aren’t a prescription for a soft landing, then I don’t know what is. To be fair, savings are falling to dangerously low levels, credit card debt has exceeded $1 trillion, housing is in a slump and prices for essentials like food and gasoline are still high. Nevertheless, we are in a period of solid GDP growth, over-the-top spending, slowing inflation and low unemployment, all critical economic indicators.

Rate Cuts, Anyone?

The November employment report pretty much guaranteed that the Fed will discontinue rate hikes going forward. As an added incentive, the Consumer Price Index (CPI) released this week showed a 0.1% increase in November and a 3.1% increase on an annual basis, meaning inflation has cooled faster than the Fed had planned. In addition, the outsized pay increases of the past two years are cooling, which will further help reduce inflation next year — a fact not lost on the Fed, either.

However, the big news was not the pause in rate hikes, but anticipation that central bank will cut rates next year. Taken together, these trends could allow the central bank to cut rates as much as 25 basis points up to four times next year. This would almost guarantee a “soft landing,” as leaving rates too high could be just enough to push the economy into a recession.

Wall Street’s concensus was that there’s a  50-50 chance of the Fed lowering its funds rate in 2024, which was enough to send the Dow to a record high of over 37,000 this week.

The Bottom Line

Two years ago we faced a bleak future. In March 2022, the Fed announced interest rate hikes to control the worst inflation since 1980. That year’s first two-quarters of GDP were negative, falling by over 2%. Economists predicted unemployment would reach 4.8% and thousands would lose their jobs. Russia invaded Ukraine and oil and wheat prices spiked, rapidly increasing the inflationary cycle.

Although we’ve come a long way since then, not everything is rosy. Prices are still too high, oil is likely to increase, high mortgage rates have tanked the housing market and war still rages in Ukraine and now Israel. 

But stay positive, don’t blink. I think we are going to be OK. 

Joe Higgins is a 46-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at

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