Jobs report ‘suggests a bit less recession risk than you might have thought,’ economist says

Below are some initial reactions from economists and other analysts, including their views on what the jobs report means for the Federal Reserve as the central bank’s Federal Open Market Committee considers how to proceed with interest-rate hikes. The main U.S. stock indexes 
SPX

ES00,
+0.24%
looked set to trade lower following the hotter-than-expected data for nonfarm payrolls, also called NFP.

• “Overall this suggests a bit less recession risk than you might have thought … & a bit more inflation risk. But really only a bit of each — with soft landing dominant.” — Jason Furman, a Harvard economics professor and former Obama economic adviser, in a tweet

Related: Wall Street is again worried about an imminent recession. Here’s what the data show, and what it might mean for your portfolio.

• “Today’s November jobs report showed there is still some sizzle left in the labor market with wage growth accelerating and the unemployment rate edging down. … Nominal wage growth re-ignited at 0.4% m/m [month over month], up from 0.2% the prior month. Today’s report will raise some eyebrows in the FOMC and is a reminder that the labor market remains tight.” — Ali Jaffery, senior economist at CIBC Capital Markets, in a note

• “This month’s strong jobs growth is yet another sign the economy is persevering as fears of a recession are lessening. As we head into 2024, we expect interest rates will remain elevated for the time being but are hopeful  the Fed may begin to cut rates toward the middle of the year, providing some much-needed financial relief on borrowing costs for American consumers.” — Steve Rick, chief economist at TruStage, in a note

• “Today’s jobs report confirms the residual strength of the U.S. labor market. While we’ve been seeing some cooling in recent months, job growth is still strong by historical standards, and the 3.7% unemployment rate reflects an economy where the vast majority of those who want a job can get a job. Critically, the report also shows nominal wage growth at a level which would be consistent with the Fed’s 2% inflation target, so I don’t think this report changes the calculus for next week’s Fed meeting.” — Jesse Wheeler, senior economist at Morning Consult, in a note

• “The 199,000 increase in November payroll employment included 47,000 workers returning from strikes (30,000 UAW members and 17,000 SAG-AFTRA members). Stripping out that one-off boost, the 152,000 gain was roughly the same as the muted increase in October. … Trend employment growth, particularly in cyclical sectors, continues to weaken, but there are few signs of any labor market capitulation. We expect the economy to narrowly avoid a recession. But, with core inflation rapidly normalizing, the Fed will pivot to rate cuts next spring.” — Paul Ashworth, chief North America economist at Capital Economics, in a note