The US economy created new jobs at an unexpectedly strong pace in December. There was a net increase of 292,000 jobs in the month, according to figures released today by the Bureau of Labor Statistics. Economists were expecting the economy to add about 200,000, in line with the average pace during 2015.
Even better, BLS says that last month's jobs report had undercounted the number of jobs created in October and November by a total of 50,000. That means the economy was creating jobs at an unexpectedly strong pace throughout the last quarter of 2015. The economy created 2.7 million jobs in all of 2015, a strong result but a bit weaker than the 3.1 million jobs created in 2014.
These results confirm that the economy has finally entered the kind of robust economic growth that seemed so elusive for the first few years after the 2008 financial crisis. The unemployment rate stayed at 5 percent, where it has been for the past couple of months:
Yet there are also signs in the report that the economy still has some room to grow. One is the labor force participation rate:
The fraction of the population that is employed has been declining since the last recession began in 2007. That's largely due to long-term demographic forces — people are living longer, staying in school longer, and so forth — but we should still expect a strong economic boom to pull some people back into the labor force. That hasn't happened yet.
The other sign that the economy is strong but could still be stronger is earnings. The average worker's hourly earnings rose by 2.5 percent — just slightly faster than the (currently quite low) rate of inflation. In a really strong economic boom — the kind we enjoyed in the 1990s, for example — we should be seeing workers' wages growing much faster than the inflation rate, producing real increases in people's standard of living.
It's a safe bet that President Obama will tout the economy's strong 2015 performance in his State of the Union speech next week. And if the strong results continue over the next year, it will give a boost to Hillary Clinton, who can be expected to run on Obama's economic record.