Moderate Jobs Growth Continues, Consumer Confidence Stabilizes

Employment grew by 157,000 jobs in January, pretty much in line with economists’ expectations, the Bureau of Labor Statistics reported Friday, Feb. 1. Also on Friday, the Thomson Reuters/University of Michigan Surveys of Consumers final reading on Consumer Sentiment came in a bit ahead of expectations, rising to 73.8, as consumers absorbed the impact of the “fiscal cliff” resolution that held most Bush-era income tax cuts but let lapse the 2% payroll tax holiday.

The surprising aspect of the jobs report was the strong upward revisions of job growth in November and December and for most of 2012. The BLS typical recalibrates the data at the beginning of each year, revising the numbers for each month of the previous year. Revised jobs growth increased by 86,000 for November and 41,000 for December. The revised totals were  247,000 for November and 196,000 for December, two of the strongest months of growth since the end of ’11 and beginning of ’12.

While the UM Consumer Sentiment measure rose slightly from the December reading and the preliminary reported earlier in January, all but the most well-off consumers remain less than optimistic. “The end of the payroll tax holiday had a significant impact on consumer confidence, especially among lower income households,” said Surveys of Consumers Chief Economist Richard Curtin.  Still, spending by higher income households is expected to offset the declines from those less well off, leading to modest spending gains throughout the year.