Much Stronger Job Growth is Needed If We’re Going to See a Healthy Economy Any Time Soon

Today’s job report is a solid start to the new year, and could be a sign that the economy has shifted into a slightly higher gear. At 257,000 jobs a month, we would get to pre-recession labor market health by May 2017 (as shown in the figure below).

The BLS revisions to 2014 payroll employment suggest moderately faster growth than initially reported last year, particularly in the last quarter of 2014. If we were to use the highest rate of growth last year—November’s 423,000 jobs added—in each ensuing month, we would return to 2007 labor market health by April 2016, over a year sooner.

There is no reason to expect a much faster growth rate of jobs, but stronger numbers on jobs will hopefully translate into decent wage growth sometime in the foreseeable future. It’s not there yet, but we can only hope.