The US Bureau of Labor Statistics reported today that total nonfarm employment increased by 256,000 jobs in December, and the unemployment rate was little changed at 4.1%. Employment was up in health care, government and social assistance. Retail trade also added jobs in December, after losing a job in November.
This press release presents statistics from two monthly surveys. The household survey measures the state of the labor force, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours worked and earnings by industry. For more information on the concepts and statistical methodology used in these surveys, see the Technical Note.
The unemployment rate was little changed at 4.1% in December. After increasing earlier in the year, the unemployment rate has been either 4.1% or 4.2% over the past seven months. The number of unemployed, at 6.9 million, was also little changed in December.
Among major worker groups, the unemployment rate for whites (3.6%) fell in December. The unemployment rates for adult men (3.7%), adult women (3.8%), teens (12.4%), blacks (6.1%), Asians (3.5%) and Hispanics (5.1). Among the unemployed, the number of people who lost their jobs permanently fell by 164,000 to 1.7 million in December, but that’s little different from a year earlier. The number of people who were temporarily laid off, at 862,000, was little changed over the month and over the year. In December, the number of long-term unemployed (those out of work for 27 weeks or more) was little changed at 1.6 million but was up by 278,000 from a year earlier. The long-term unemployed made up 22.4 percent of the total unemployed in December.
The impact of the US unemployment rate on consumer behavior and spending
The U.S. unemployment rate greatly affects consumer spending patterns, affecting economic activity in various ways. Here’s how it affects consumer behavior:
- Income levels
Stable employment: A low unemployment rate usually refers to hiring more people, leading to higher levels of overall income. When consumers feel secure in their jobs, they are more likely to spend money on goods and services.
Disposable income: Higher levels of employment increase disposable income, allowing consumers to spend more on discretionary items, travel, and luxury goods.
- Consumer confidence
Psychological effects: The low unemployment rate boosts consumer confidence, as individuals feel more secure about their financial situation and job prospects. This confidence encourages spending.
Recognizing economic health: When unemployment is low, consumers see the economy as strong, which can lead to an increased desire to make large purchases, such as homes and cars.
- Spending on necessities versus discretionary items
Necessities: In times of high unemployment, consumers often prioritize spending on basic goods (such as food and housing) and reduce discretionary spending.
Discretionary spending: The low unemployment rate encourages consumers to spend on non-essential items, leading to growth in sectors such as retail, travel and leisure.
- Use of debt and credit
Borrowing behavior: With a stable labor market, consumers are more likely to take on debt (such as mortgages and personal loans) to finance larger purchases.
Credit confidence: A low unemployment rate is often associated with improved credit conditions, making it easier for consumers to access credit and loans.
- Impact on savings
Savings rates: When unemployment is low and incomes are stable, consumers may feel less need to save for emergencies, leading to lower savings rates and increased spending.
Emergency funds: Conversely, during periods of high unemployment, consumers may prioritize building emergency savings and limiting discretionary spending.
Consequences of the impact on the US unemployment rate
The unemployment rate in US dollars is influenced by various factors that reflect the overall health of the economy and labor market. The main factors affecting it are as follows:
Economic growth:
- Strong economic growth usually increases the demand for labor, reducing the unemployment rate.
- Conversely, economic recessions can lead to layoffs and increased unemployment.
Commercial Investment:
- Increased business investment in infrastructure and technology and expansion can create jobs, leading to a reduction in the unemployment rate.
- Low investment can lead to hiring freezes or layoffs.
Consumer Demand:
- Higher consumer spending increases business revenue and can lead to job creation.
- Lower consumer confidence can reduce demand, leading to a high unemployment rate.
Labor Force Participation Rate:
- Changes in the labor force participation rate (the percentage of working-age people who work or are actively looking for work) can affect the unemployment rate.
- A low participation rate can lower the unemployment rate even if fewer jobs are available.
Seasonal Recruitment:
- Some industries (such as agriculture and tourism) experience seasonal fluctuations, which affects the unemployment rate at different times of the year.
Technological changes:
- Automation and advances in technology can displace workers, leading to structural unemployment, while also creating new jobs.
Government Policies:
- Fiscal policies, such as government spending and tax policies, can affect job creation.
- Labor laws and regulations, such as minimum wage laws and unemployment benefits, can also affect employment levels.
Global Economic Conditions:
- Economic conditions in other countries can affect the labor market in the United States, especially in the global economy.
- International trade and competition policies can affect domestic labor markets.
