More Jobs Being Created: Why the News Isn’t as Great as it Sounds
While the economic picture is certainly rosier today than say six years ago, the latest U.S. jobs report offers a mixed bag of news as 2016 gets into full-swing.
First, the good.
The economy added 151,000 jobs in January. The unemployment rate dipped to 4.9 percent, which is the lowest level since 2008. New Jersey's average is currently 5.1 percent. And wages ticked up over the last year, with the average worker earning $25.39 an hour.
But, the figures missed many analysts' projections and were a slowdown from the torrid end to 2015.
"This is truly a mixed report; it falls short in terms of expectations; we do see wages increase, which is a positive - we saw the unemployment rate actually go down, the participation rates staying near the same," JJ Kinahan, TD Ameritrade chief economist, said.
Kinahan is most alarmed by the division between sectors where job growth is occurring and where it's not.
"If you look at the top two areas where jobs were created, it ended up being retail, and food and restaurant establishments, so a little bit of a flip-flop from what we've seen because as jobs were getting stronger, we were seeing it coming through health care and business-to-business services," he said.
While this is certainly a more positive trend than losing jobs, these industries are not known to ignite the economy.
"If we could continue to see the business-to-business services and the health cares of the world and manufacturings continue to get momentum, that's where you build careers. That's where you build confidence in the economy overall," Kinahan said.
Most analysts feel that the economy will slow down versus last year, but do not believe an outright recession is on the horizon.
"It's very hard to maintain the momentum that was seen in the final quarter of last year," said Bankrate's Mark Hamrick. "We had very strong jobs creation then and very robust hiring in the month of December. We think that it has cooled since then."
Meanwhile, here in New Jersey, private sector job growth was strong in 2015 with 64,500 employees added, which was the best figure in 15 years. But, there are looming concerns that threaten to impact New Jersey's economy this year.
The ongoing pension battle continues to create uncertainty. The broke Transportation Trust Fund still needs to be replenished. Moody's credit-rating agency issued a warning that the state's cost for borrowing money could rise based on those two lingering issues.
And there is also the cloud of Atlantic City's finances hanging over the state economy.
Gov. Chris Christie is set to deliver the annual budget address on Feb. 15.