Another Miss on Job Creation

Matthew G. Saroff
3 min readJan 8, 2022

Annual job creation

Once again, job creation was about half of what was forecast.

Rather confusingly, the unemployment rate also fell.

By way of context, the number of jobs are still about 3 million below pre-pandemic levels and about 5 million below trend.

I gotta figure that the pandemic is screwing with seasonal adjustments:

U.S. hiring moderated in December to close out a record year for job gains ahead of disruptions from the Omicron variant, with declining unemployment and robust wage growth suggesting the economy will grow solidly this year.

Employers added 199,000 jobs in December, below average monthly job growth of 537,000 in 2021, the Labor Department said Friday. Slower job growth in recent months largely reflects companies’ inability to find workers as labor supply remains tight, some economists said.

Last month’s payroll gains left the U.S. economy with about 6.4 million more jobs than at the end of 2020 — a greater increase than in any year on record — but the nation remains 3.6 million jobs short of pre-pandemic levels.

The broader economy regained its footing with the distribution of Covid-19 vaccines and strong demand from consumers armed with government stimulus who stoked spending. But the pandemic also delivered setbacks, including surges in virus cases and supply-chain disruptions that slowed growth.

The labor market, while still recovering from the pandemic, is entering the year on much better footing than it did at the start of 2021. In recent months, job openings surged to historically high levels and workers quit their jobs at record rates.


The unemployment rate fell to 3.9% last month from 4.2% in November. Many employers are ramping up pay as they compete for a limited pool of workers. Average hourly wages increased 4.7% in December from a year earlier, holding well above wage growth of roughly 3% preceding the pandemic and playing a part in historically high inflation.

The evidence of a tight labor market and high inflation is likely to keep Federal Reserve officials on track to lift interest rates from near zero as soon as their policy meeting in March.

With the holiday season over, I think that maybe we will start seeing a clearer picture of what is going on, or maybe not.