Economy Caps Solid Year of Labor-Market Growth With Slightly Disappointing December

The economy added a slightly disappointing 148,000 net new jobs last month as the unemployment rate held steady at a 17-year low, capping another solid year of labor-market growth in one of the longest expansions in the nation’s history.

December’s job gains were well below analyst estimates and down sharply from an upwardly revised 252,000 net new jobs added in the previous month. A continued decline in the retail sector, which shed 20,000 jobs in December, was a key factor in the slowing growth.

The unemployment rate remained at 4.1 percent for the third straight month. That is the lowest since the end of 2000.

Wages showed a solid gain, with average hourly earnings jumping 9 cents to $26.63 in December after just a three-cent rise the previous month. Wages were up 2.5 percent in 2017, about the same annual gains as the previous two years.

Overall in 2017, the economy added more than 2 million net new jobs, for the seventh consecutive year. But the gain of just under 2.1 million last year was down slightly from 2.2 million in 2016 and well off the nearly 3 million jobs added in 2014.

Job growth has been trending downward since 2014, indicating that the nation is nearing full employment as the recovery from the Great Recession is more than eight years old.

Still, the labor market right now is “about as good as it gets,” said Mark Zandi, chief economist at Moody’s Analytics.

“It’s not picture perfect, but it’s a pretty picture,” he said. “I think the business’s No. 1 problem is already finding qualified workers and that problem is going to intensify as the year progresses.”

The 2017 job growth was largely an extension of the economic policies enacted under former President Barack Obama, Zandi said.

It takes months for a new president to have an effect on the economy. Aside from some regulatory reductions, President Donald Trump did not put any major economic policies in place until the tax-cut legislation at the end of last year, said Zandi, who was an adviser to Sen. John McCain’s 2008 presidential campaign.

“2017 was very much an Obama economy. 2018 will be Trump’s economy,” Zandi said. “Going forward it’s his. He owns it.”

Zandi predicted that the economy would add 2 million jobs again in 2018, boosted by the Republican tax-cut bill enacted last month.

Barclays said in a research report this week that it expected two more years of “above-trend growth” in the labor market, pushing the unemployment rate down to 3.1 percent by the end of 2019. That would be the lowest rate since 1953.

U.S. employers announced 418,770 job cuts last year, the fewest since 1990, according to career counseling firm Challenger, Gray & Christmas Inc. The announcements last year of plans to hire more than 1.1 million workers was up 27 percent from the previous year and the most since Challenger began tracking them in 2005.