Jobs report might not show bright future for 2023
The latest jobs report was released Friday, and on paper, things look optimistic.
Unemployment continues to be among the lowest its ever been, now at 3.5% nationally, according to the Bureau of Labor Statistics. Additionally, 4.5 million jobs were added in 2022.
The unemployment rate fell to 2.6% in Palm Beach County.
But with good news, comes reality.
Mark Hamrick, an economic analyst with BankRate.com, told WPTV that when unemployment rates are running low it's not always reassuring.
"Fears are running high, expectations are high, that there could be a shallow recession in the coming year," Hamrick, a senior economist at Bankrate.com, said.
Hamrick said when unemployment rates are running low, it's not always reassuring.
"While we have pockets of unemployment, that does not affect everyone nearly as much as inflation does," Hamrick said. "So, the central bankers are trying to slow the economy, trying to take some of the heat under or away from inflation pressure."
That is done by raising interest rates.
Sofia Johan, an associate professor of finance at Florida Atlantic University, agrees, pointing out that it's a textbook example involving inflation and unemployment.
"The jobs report is actually quite concerning because this is the Phillips Curve at its best, which is if inflation goes up very high, then employment actually decreases," Johan said.
The report also showed that wages went up in 2022, but both economists said it's hardly enough.
"If prices of goods are going up by 7% and wages are only going up 4%, there's still that shortfall where we either have to dip into our savings or we have to stop buying certain things," Johan said.
"Wage gains at 4.6% on an annual basis remain well short of what people are experiencing with inflation," Hamrick said.
So unemployment might be among the lowest it's ever been, but they say now's the time to focus on your savings, especially considering the job market in Florida is geared heavily towards hospitality.
"In the event that we do hit a recession, these are the same jobs that will be lost almost immediately. Construction will go down, leisure, hospitality," Johan said.
"We're seeing hiring slowing, and we should expect more of that in the coming year," Hamrick said.
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