Dawit Kebede

CUNA economics: Cooling wage growth in December

January 8, 2023

CUNA Senior Economist Dawit Kebede, PhD, issued the following statement in response to the Labor Department’s December Employment Situation:   

"The December jobs report showed that the U.S. economy added 223,000 jobs, a slower pace relative to previous months but still robust considering the overall labor market condition. The total employment level increased by 3.2 million in 2022.  The unemployment rate declined to 3.5%. 

"Labor force participation increased slightly by one-tenth of a percentage point, adding 440,000 people. The average hourly earnings increased by 0.3% - a slowdown from previous months. This is equivalent to an annualized rate of 3.6% growth, reducing the probability of wage-price spiral. Average hourly earnings have been consistently at or above 5% in previous reports. 

"This report is encouraging for the Federal Reserve, which was expecting a slack in the labor market, to bring inflation down to its target level. The rate of job increases is slowing down. Big tech firms are announcing layoffs which will lead to further cooling of the labor market. The wage increase pressure on inflation is also easing."