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The U.S. economy added 145,000 jobs in December

That did set a record of 10 years of job growth for the economy.

But the 145,000 job growth in December was below the 256,000 added in November and below the 160,000 expected by economists surveyed by Bloomberg. (I would note that the November numbers were inflated by the end of the General Motors strike and that December’s jobs report is historically subject to error from seasonal adjustments from holiday hiring.)

Most worrying, however, was a slowdown in the rate of wage growth to 2.9% year over year in December from 3.3% year over year growth in December 2018. That’s the first sub-3% growth rate for wages since July 2018.

On the news of the miss against economist expectations and the drop in wage growth, stocks fell ahead of the weekend. The Standard & Poor’ 500 closed down 0.29% and the Dow Jones Industrial Average shed 0.46%. Th NASDAQ Composite fell 0.27% and the Russell 2000 small cap index lost 0.47%. The iShares MSCI Emerging Markets ETF (EEM) picked up 0.53%.

Fueling the drop in stocks was a conviction that the drop in wage growth would be interpreted by the Federal Reserve as showing that the job market isn’t as tight as the employment gains suggest. Which could lower the possibility of any change in interest rates by the Fed in September or so.

The official unemployment rate remained at 3.5%. The U.S. economy added 2.1 million jobs in 2019. That was a drop from the 2.7 million jobs added in 2018.

The January employment report is already getting a lot of speculative attention. A number of states increased their minimum wage effective with the start of 2020 and that could lead to a pick up in the rate of wage growth in January.