Two economic releases today tell us that U.S. economic conditions remain strong for workers. The Commerce Department's Bureau of Economic Analysis reported an advance estimate that the U.S. economy grew 2.9% in the last quarter of 2022. That's a slight decline from the preceding quarter, but still strong economic growth. Solid economic growth is a clear indication that the American economy is strong and there are no signs that an unemployment-producing recession is looming.
Strong economic growth should spur continued sizable jobs growth and, with it, sustained individual worker power (for many workers, but not all) in the labor market. The economy added 375,000 jobs per month in 2022, although monthly jobs growth slowed in the latter half of the year to a still-robust level above 200,000, on average.
The second economic release, the Labor Department's report of initial weekly unemployment claims, offers further proof that U.S. labor markets remain tight. Initial weekly unemployment claims fell during the week of January 21 to 186,000 from an already very low level in the preceding week. The four-week average of initial claims also fell. UI claims are now 36,000 lower than they were during the same week last year, and last year's level was historically quite low. UI claims are a proxy for layoffs in the economy. So, employers are not letting their workers go, probably because they are experiencing the economic growth that showed up in the Commerce Depatrment's GDP numbers.
Despite the high-profile layoff announcements from numerous technology companies, tech workers have not yet shown up on the unemployment lines in large enough numbers to influence the national data. In fact, it's entirely possible they never will. Tech workers offer skills and experience in a growing economy where technology applications and innovation are ubiquitous. Other employers are likely hiring them before they can brush up their LinkedIn profiles.
All of this is great news for workers and, in particular, workers' wages. Different data tell the same story: workers' wages are rising faster than inflation. According to the Commerce Department, families' disposable personal incomes have increased at a much faster rate than prices over the last five months. According to the Bureau of Labor Statistics, except for one month, workers' real (i.e., inflation adjusted) average hourly earnings have increased every month since July 2022. That's not just a meaningful sign of real worker power in their dealings with employers. It's improving the quality of workers' lives.
