Another over-the-top employment report

By Joe Higgins, Quest 4 Quality

  • The U.S. Bureau of Labor Statistics said non-farm payrolls increased by 353,000 in January  vs. Wall Street’s estimate of 175,000
  • The unemployment rate has remained at 3.7% for the past three months
  • Wages  jumped 4.5% in January on an annual basis and are now exceeding inflation for the first time in two years

Job creation in January was really off the charts, and that’s not hyperbole. Unemployment has been below 4% for 24 months and near a 50-year low. Wages have finally exceeded the inflation rate as prices have cooled, and retail sales have been up for 12 straight months. It has been a remarkable run for our economy and has stunned economists. 

Here is the deal on jobs: if the economy creates 100,000 jobs in a month, it’s enough to keep pace with population growth. If it creates 150,000 jobs, that is considered excellent. But if it adds over 300,000, that is extraordinary. And then if it revises the prior months up by 117,000, well, that’s just wild. 

The U.S. Bureau of Labor Statistics reported that non-farm payrolls increased by 353,000 jobs in January  vs. the Wall Street estimate of 175,000, and that the unemployment rate remained at 3.7% for the third month in a row — well below the magic number of 4% and bettering the Dow Jones estimate of 3.8%.

Job growth is a key indicator of a healthy economy, and it is nearly impossible to have a recession when the unemployment rate is below 4%. It shows that the labor market, which has been below 4% for the past three years, will support growth in all sectors of the U.S. economy.

Indeed, the economy added jobs across several sectors in the January report. We had healthy increases in business services, health care, government and retail. 

Wages also jumped, up 4.5% in January on an annual basis, and are now exceeding inflation for the first time in years. Pundits, trying to make things look bad, reported a decline in average hours worked, but the figures are an insignificant 0.2%. It could also mean employers are reducing hours slightly to hold onto trained workers.

Another surprise in the January report: the December numbers were revised upward by 117,000 jobs, bringing the December total to over 300,000. That follows a minor revision to the November report, an increase of 9,000 jobs, which brought that total to 182,000. Usually the first jobs report of the year is fraught with seasonality issues due to the hiring of extra employees for the holiday selling season, who are then laid off in early January. Yet job losses were scarce, which is another sign of a healthy economy. 

Last month’s massive rise in jobs raises a big issue: what to do about inflation. Back on December 12, 2023, the Federal Reserve indicated that it might pause interest rate hikes or maybe even cut them as early as the first quarter of this year. With a gain of over 350,000 jobs in one month, it puts the idea of a rate cut in the icebox for now. Excessive jobs are inflationary as they add additional paychecks to the economy, which tends to increase demand and cause prices to rise.

The current consensus is that there is a 75% chance that Fed Chairman Jerome Powell will not cut rates at the Fed’s March meeting. 

Bottom Line

Jobs aside, what do the economic indicators tell us about the year ahead? Here is my take:

Consumer confidence is the best it’s been in two years, with the Consumer Confidence Index at 110 and the Michigan Consumer Sentiment Index (MCSI) at 79. This strong confidence has led to increased consumer spending, which is 72% of Gross Domestic Product.

Job gains have also continued in record numbers over the past three years, and the S&P500 closed last Friday at 4,959, its highest in history. It joined the Dow Jones Industrial Average’s record week, which ended at over 38,654 and is rapidly closing in on 40,000. 

‌And finally, 2023 ended with Q4 GDP at 3.3% and the Atlanta Fed’s “GDPNow” forecast for Q1 is tracking at 4.2%. 

So how is this year looking? Over the top!

Joe Higgins is a 44-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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