By Paul Gomme and Peter Rupert
GDP
The BEA announced that the advance estimate for Q4 GDP came in at 2.9% after increasing 3.2% in Q3. Personal consumption expenditures remained pretty stable, increasing 2.1%, contributing about 1.4 percentage points of the total increase in GDP. The basic message being that recessionary fears are somewhat allayed, at least for now.
While real investment increased 1.4% overall, the components were mixed. Investment in nonresidential structures increased 0.4%, the first rise in 6 quarters. Residential investment, however, fell for the seventh straight quarter, falling 26.7%.
The BEA also announced Personal Income and Outlays for December. The report showed that real personal income increased 0.2% from November to December while real personal consumption expenditures declined by 0.3%. The PCE price index rose 0.1% over the month and core PCE rose 0.3%.
Labor Market
The BLS announced the employment situation showing payroll employment increased 517,000, and, as per usual, crushed the estimates that hovered around 190,000. The report, along with a strong December continued a robust labor market in 2022 after coming through pandemic-related turmoil. Pre-pandemic employment stood at 152,504,000 in February of 2020. The pandemic created a massive decline, down to 130,515,000 in April of 2020; a decline of 21,989,000 (17%) in just two months! The decline rapidly reversed, however, and by January, 2022 employment stood at 149,744,000, about 2% lower than its February 2020 level. Since January of 2022 employment has increased by about 4,000,000 and now stands at 153,743,000.
The bulk of the increase in the January data was in the service sector, rising 397,000. The information sector lost 5,000 jobs for the second straight month. Information employment saw a large fall in employment starting around the beginning of 2000 and another large dip during and after the Great Recession, in total, that sector lost about 1,000,000 jobs during that period. Since then, the information sector has gained back about 500,000 of those jobs and now has roughly 3.1 million workers.
Average weekly hours of work shot up from 34.4 to 34.7. This, accompanied by the 517,000 increase in employment, led to about a 15% increase in total hours of work in the US, far surpassing any increase over the last couple of years.
Also just released by the BLS was the preliminary estimate of Q4 non-farm productivity. Output per hour rose 3.0% with output rising 3.5% and hours of work rising 0.5%.
The recent JOLTS showed that the number of job openings increased in December, now standing at just over 11 million, that is, about 2 job vacancies per unemployed individual. It is certainly clear that this is one of the strongest labor markets ever seen, at least since the unemployment data began in 1948.
