(Bloomberg View) -- The U.S. economy is still creating lots of jobs, with a seasonally adjusted 148,000 added in December and 2.2 million (not seasonally adjusted, for reasons I discuss below) for full-year 2017, according to Friday's employment report from the Bureau of Labor Statistics.
That 2.2 million is up a little (93,000 jobs, to be misleadingly precise about it) from 2016's total, but it's down substantially from earlier in the current economic expansion.
You may have seen other reports indicating that job growth this year was slightly less than in 2016. That's true according to the seasonally adjusted numbers from the BLS, but when calculating annual totals I figure seasonal adjustments only muck things up, so I went with the unadjusted data. Also, all these numbers are going to change next month anyway in an annual benchmark revision. So I wouldn't make too much of a 100,000-job shift in either direction!
My general sense, though, is that job growth is in fact slowing. One reason I think that is because I've been following the shifting fortunes of the mining and oil and gas businesses, which often follow different cyclical trajectories than the economy as a whole. The mining sector (which in BLS nomenclature includes oil and gas extraction) shed 78,200 jobs in 2016 after big oil, natural gas and coal price declines and gained back 60,600 in 2017 as prices stabilized or rose. If not for that, job growth would have been lower in 2017 than in 2016.
Another reason to think job growth is slowing is that's what it usually does several years into an expansion:
Recent recoveries have seen less-spectacular early job gains than those of the 1980s and before, a result in part of the shrinking labor-market role played by manufacturers and their penchant for temporary layoffs during downturns. Still, the trend of job growth rising to a peak and then fading seems to hold. In the 1980s and 1990s recoveries, job growth did get a second wind, in both cases accompanied by a stock-market boom, but in neither case did it surpass the earlier peak. Which is to be expected: After a recession, there are millions and millions of unemployed people ready to go right to work. A few years into a recovery, not so much.
We may be about to experience another such second wind now, as a business sector encouraged by tax cuts and deregulatory attitudes in Washington invests in job-creating new projects. But don't expect it to be all that dramatic with the unemployment rate at just 4.1 percent -- about as low as it has been since the late 1960s. The prime-working-age (ages 25 to 54) employment-population ratio is still well below its late-1990s peak, indicating some remaining labor-market slack, but the prime-age population, which was growing in the late 1980s and 1990s, really isn't now. If this expansion does in fact get a second wind, it seems likelier to pay out in wage gains than in accelerating job growth.
Let's be clear: Faster wage gains would be great. They might also help jump-start productivity growth, which has been lagging around the world for the past decade-plus, thus limiting the economy's potential. As the Economist's Ryan Avent argued in a New York Times op-ed last month:
Just as expensive oil encourages us to wring more utility out of each gallon of gas, high wages encourage companies to make the most of their work forces — and to make full use of whatever new technologies promise to economize on payroll.
So yes, job growth is probably slowing. Let's see if something good can come of that.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
The unemployment rate hit percent in April but ranged from percent to percent for the rest of that year. From February through January the rate stayed below percent for 48 consecutive months, and went as low as percent. The lowest rate on record (the data series goes back to was percent, in May and June
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