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Unemployment rate falls below 4% for the first time since pre-Covid

While overall job growth fell short of expectations in December, the unemployment rate fell below 4% for the first time since before Covid-19.
Booming U.S. Recovery Is Leaving Some Communities Completely Behind
A "We're Hiring" sign in the window of a tea bar in San Gabriel, Calif., on March 23, 2021.Jessica Pons / Bloomberg via Getty Images

Expectations heading into this morning showed projections of about 440,000 new jobs added in the United States in December. As it turns out, according to the new report from the Bureau of Labor Statistics, the preliminary tally suggests the job market was weaker than expected. CNBC reported this morning:

The U.S. economy added far fewer jobs than expected in December just as the nation was grappling with a massive surge in Covid cases, the Labor Department said Friday. Nonfarm payrolls grew by 199,000, while the unemployment rate fell to 3.9%, according to Bureau of Labor Statistics data.

Like last month, the data seems a little strange. With the unemployment rate improving to its lowest point since before the pandemic, and with wages up, we'd expect to see stronger overall job growth.

What's more, job totals from October and November were both revised up, adding an additional 141,000 previously unreported new jobs — on top of the 199,000 jobs created in December.

With this in mind, as disappointing as it is to see last month's tally fall far short of expectations, it's hard not to wonder whether this initial total will be revised in an encouraging direction a month or two from now. This would certainly be in keeping with the recent trend: Throughout 2021, preliminary jobs reports have dramatically understated actual job growth.

As for the political context, over the course of the first three years of Donald Trump's term — when the then-Republican president said the United States' economy was the greatest in the history of the planet — the economy created roughly 6.5 million jobs. This includes all of 2017, 2018, and 2019.

According to the latest tally, in 2021, the U.S. economy created 6.4 million jobs.

For many years, I ran a chart at the bottom of posts about the monthly jobs reports, but the job losses at the start of the pandemic were so severe, it's rendered the image largely meaningless. I'm still retooling it in the hopes of making it useful again.