Current:Home > FinanceHiring is booming. So why aren't more Americans feeling better? -MarketLink
Hiring is booming. So why aren't more Americans feeling better?
View
Date:2025-04-14 21:44:08
Friday’s blockbuster jobs report, highlighted by a stunning 353,000 payroll gains last month, again pointed up a nagging question: If the economy and labor market are so strong, why aren’t more Americans feeling it?
To be fair, people are feeling better than they have been in the past couple of years. Consumer sentiment in January jumped to the highest level since July 2021 on easing inflation and rising incomes, according to a University of Michigan index that was also released Friday.
But the closely watched gauge is still well below its pre-pandemic level and a tad short of its long-run average.
Keep in mind the January job gain wasn’t a blip. Job growth in November and December was revised up by a total of 126,000, meaning an average 289,000 jobs a month have been added since November. And the average 255,000 monthly increase last year is down from 399,000 in 2022 but still robust.
So what gives?
Inflation, inflation, inflation
Sure, Americans like seeing nice headlines about vigorous hiring.
But, “Consumers hate inflation,” says John Leer, chief economist of Morning Consult, a research firm that conducts a monthly consumer confidence survey. And while monthly job tallies can seem abstract, people feel the effects of high prices in their wallets.
But hasn't inflation been slowing while wages increase sharply?
Yes. Wage growth has outpaced inflation since the spring of last year, meaning workers’ inflation-adjusted pay has been rising after falling for many months. Last month, average yearly wage growth ticked up to 4.5% from 4.3%, according to the jobs report.
And by some measures, total average pay increases have caught up to and topped total price gains since the inflation run-up began in mid-2021. In other words, Americans on average now have more purchasing power than they did, according to a recent Treasury Department study.
Then why aren't more consumers smiling?
Shoppers see gasoline and supermarket prices every day. They don’t necessarily see or think about their paychecks, Leer says. And while price increases have slowed, most prices aren’t coming down.
“It takes a while for (higher but stable prices) to flow through” to how Americans think about their financial situation, Leer says.
The Federal Reserve’s preferred annual inflation measure was at 2.6% in December, below the 7% high in summer 2022 but above the Fed’s 2% goal.
Even after inflation drifts down to 2%, “There’s a very serious risk that we could get inflation under control," but because prices themselves won't be coming down "people will still feel downbeat.”
What is boosting consumer confidence?
A record stock market, fueled by the prospect of Fed rate cuts this year, and relatively low gasoline prices have propelled sentiment higher, says Ian Shepherdson, chief economist of Pantheon Macroeconomics.
The outlook of higher-income Americans who are heavily invested in the market through stocks or mutual funds has significantly improved, Leer says.
But a much larger number of lower-income households are still burdened by record credit card debt and delinquencies that hover at a 13-year high. As income gains outpace inflation, the mood of that group also has started to improve but it will take time before they feel a big difference, Leer says.
Also dampening sentiment: Interest rates are still high and pandemic-related savings are dwindling, says Grace Zwemmer, economic research analyst at Oxford Economics.
Fed officials have signaled they will lower interest rates this year as inflation declines further. But they indicated this week the first cut likely won't happen for at least several months.
Shouldn't Americans at least be feeling good about the job market?
Yes, but job growth overall has cooled over the past year. There are fewer job openings but still lots of candidates job hunting, making it more challenging to find a position.
And although 353,000 jobs were added last month, the number was pumped up a bit by seasonal adjustments. Since fewer temporary holiday workers were hired by retailers this past holiday season, fewer were laid off in January. That resulted in a seasonally adjusted gain of 45,000 jobs in retail even though the industry actually shed jobs.
And most workers’ outlook is affected more by news about layoffs than job gains, Leer says.
Recently, companies such as UPS, Google, Amazon and Microsoft have announced thousands of layoffs, though job cuts overall remain low.
Employees, he says, like stability.
“We’re not in a stable period right now,” he says.
veryGood! (198)
Related
- Paige Bueckers vs. Hannah Hidalgo highlights women's basketball games to watch
- Powerball winning numbers for for Jan. 17 drawing, as jackpot grows to $102 million
- Man sentenced to 3 years of probation for making threatening call to US House member
- Issey Miyake displays canvas of colors at Paris Fashion Week
- Head of the Federal Aviation Administration to resign, allowing Trump to pick his successor
- Brittany Mahomes Trolls Patrick Mahomes For Wearing Crocs to Chiefs Photo Shoot
- Chris Stapleton, Foo Fighters, Queen Latifah to join The Rolling Stones at 2024 Jazz Fest
- Columnist accusing Trump of sex assault faces cross-examination in a New York courtroom
- Megan Fox's ex Brian Austin Green tells Machine Gun Kelly to 'grow up'
- Jacob Elordi takes a goofy tumble down the stairs in 'SNL' promo: Watch
Ranking
- Nevada attorney general revives 2020 fake electors case
- Florida Senate passes bills seeking to expand health care availability
- Warriors' game on Friday vs. Mavericks postponed following assistant coach's death
- 9/11 victim’s remains identified nearly 23 years later as Long Island man
- Angelina Jolie nearly fainted making Maria Callas movie: 'My body wasn’t strong enough'
- Sonic has free food for teachers and school staff this week. Here's how to redeem.
- You'll Cringe After Hearing the Congratulatory Text Rob Lowe Accidentally Sent Bradley Cooper
- Asa Hutchinson's anti-Trump presidential campaign mocked by DNC
Recommendation
The Louvre will be renovated and the 'Mona Lisa' will have her own room
Kate Beckinsale Slams BAFTA's Horribly Cold Snub of Late Stepfather
Usher’s Promise for His 2024 Super Bowl Halftime Performance Will Have You Saying OMG
Richard Simmons Makes Rare Statement Speaking Out Against Upcoming Biopic Starring Pauly Shore
Charges tied to China weigh on GM in Q4, but profit and revenue top expectations
'All of Us Strangers' movie review: A beautiful ghost story you won't soon forget
Florida Senate passes bills seeking to expand health care availability
Chiefs vs. Bills playoff game weather forecast: Is any snow expected in Buffalo?