Labor Market The U.S. labor market is in the midst of one its strongest periods ever. More Americans are working than ever before, the unemployment rate has been relatively low for a prolonged period of time, and in 2023 real wages increased. The strong labor market has contributed to economic growth through increased consumer spending. The table below shows the unemployment rate since January 2022. The unemployment rate was below 4.0% from February 2022 through October 2023. The streak of 21 consecutive months with an unemployment rate below 4.0% was the longest monthly streak since the 1960s. In January 2023, the unemployment rate bottomed out at 3.4%, the lowest rate since 1969. Jobs were added in every month from January 2021 through October 2023. Although the unemployment rate has been rising since July, the total number of Americans working has continued to grow as labor force participation has increased.
Unemployment Rate (Source: Bureau of Labor Statistics)
Year
Jan Feb Mar
Apr
May
Jun
Jul
Aug Sep Oct
Nov
Dec
2022 2023
4.0 3.8 3.6 3.6 3.6 3.6 3.5 3.7 3.5 3.7 3.6 3.5
3.4 3.6 3.5 3.4 3.7 3.6 3.5 3.8 3.8 3.9
More Americans were working in October 2023 than ever before. The chart below shows total employment (in thousands) since the turn of the century. Approximately 157 million Americans were employed in October 2023, an increase of 27 million workers since the April 2020 COVID low of 130 million. Approximately 5 million more Americans were working in October 2023 than December 2019. The decreasing slope of the line in the chart reflects monthly job gains in 2023 have generally been less relative to 2022. Although the labor market remains strong, the monthly decline in job gains indicates some softening has occurred since early 2023. Total Employees, Thousands January 2000 – October 2023 (Source: U.S. Bureau of Labor Statistics)
The chart below shows the 3-month moving average of median hourly wage growth (blue line) relative to the annualized inflation rate (red line) as measured by the Consumer Price Index. Between April 2021 and January 2023 inflation exceeded wage growth; consequently, real wages declined. However, the trend reversed in early 2023, and since February real wages increased as the growth in hourly wages exceeded the rate of inflation. Wage growth was 4.2% in September 2021, the highest growth since 2008, and peaked at 6.7% in August 2022. The generally declining trend in wage growth in 2023 is another indication of a softening labor market.
Central Wisconsin Report - Spring 2023
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