It happens. Every so often the Bureau of Labor Statistics reports an aberrant jobs number. This appears to be one of those months. December's disappointing employment gain of 148,000 was well below expectations and inconsistent with every other statistic on the strength of the job market and broader economy during the month.
Historically, these kind of surprises are often revised away as the BLS collects more responses from businesses that participate in their survey. Particularly in months like December that are notoriously tricky given the vagaries of the weather and measurement issues around Christmas hiring. Indeed, brick-and-mortar retailers continued to lay-off workers last month, and while that's not a surprise, employment at delivery services which is driven by booming online retailing, showed a surprisingly small gain.
Abstracting from the monthly vagaries of the data like these, underlying job growth remains closer to 175,000 jobs per month. And it is likely to shift higher, at least through this summer, as the impact of deficit financed tax cuts filter through. The fiscal stimulus should provide a temporary boost to growth and jobs, adding an estimated 300,000 job in 2018, and ensuring this year will be another year of 2-million plus job growth.
At this pace of job growth, unemployment, which held steady last month at a low 4.1 percent, will continue to decline. Sub-4 percent unemployment seems likely by the spring and mid-3 percent unemployment is very possible by this time next year. The last time the job market was this tight was only for a few months at the very end of the technology bubble around Y2K. Then you have to go back to a brief period in the 1960s and then the early 1950s during the height of the Korean War when millions of men had been drafted into the military.