The labor market remains seriously out of balance, and the Federal Reserve is not likely to relent so long as this remains true.
Nonfarm payrolls grew by 223,000 in December, the Labor Department reported on Friday. The unemployment rate dropped down to 3.5 percent. Both the rise in job and the decline in employment exceeded consensus forecasts, demonstrating once again that the labor market is far more resilient than most economic models suggest.
The total level of unemployed persons in the U.S. fell to 5.7 million, matching the post-pandemic record low hit last July. It is also tied with the prepandemic record low hit in February 2020. Prior to those moments, unemployment has never been so low in this century. It was only during the height of the dot com bubble on the 1990s that the level of unemployment got so low. Before that, you have to go all the way back to the 1950s, when the population and the labor force were much smaller, to find a period in which so few Americans were looking for work but unable to find a job.
The ratio of job vacancies to unemployed persons rose to 1.8 percent, indicating that the labor market tightened even more in December. This is a measure of labor market imbalance that has frequently been cited by Fed officials as a reason to worry about inflation.
The payrolls report confirmed the picture of the labor market painted this week by the higher-than-expected job openings figure, the surprising jump in the ADP private payrolls data, and the plunge in unemployment claims. Despite the Federal Reserve raising interest rates by more than four hundred basis points last year, the appetite for workers remains extremely robust.
This is a bit of a mystery. Public opinion polls indicate that many Americans think we’re already in a recession. Surveys of professional macroeconomists show that most believe the economy will enter a recession sometime this year or early next year. So why are employers still hiring at such a frenetic pace?

Breitbart