Unemployment Hits 9 Year Low

The nation's unemployment rate dropped to 4.6% in November. The lowest level since the recession and 178,000 jobs were added to the economy. Now all eyes turned to the Federal Reserve and whether it will raise interest rates in December. Joining us to discuss is WSJ chief economics commentator Greg Ip. Hi Greg, thanks for being with us. Hey Tanya. So, this jobs report came on the heels of an upbeat housing report this week as well, is all of this enough for the Fed to make a move on rates? Well, I would think so I mean as as long ago as a month ago they basically were in default mode that they were gonna go in December, unless the data turned up to be bad. The data hasn't only been good it is actually been a little bit better than expected, so I see very little to stand in the way of them moving on that at their next meeting. Alright now, while the jobless rate did dip to its lowest level in 9 years wages have yet to return to their pre-recession levels will that be a concern for the Fed? It will be but I don't think it's enough of a concern to stay their hand... the wage numbers were a little bit troubling in this report we saw a 0.1% monthly decline the annual rate dropped to 2.5% from 2.8% in October but I would take ... have a cautionary note before I would worry too much. There were quirks to the calendar that caused the number to be overstated in October and understated in November, so the real trend on wages is still probably around 2.5% which is a very modest acceleration from a few years ago when you consider the fact that productivity growth is also extremely weak 2.5 to 3% is probably a...a good approximation of the trend so I don't think there's anything here for the Fed to worry about it too much. And Greg in terms of who was hiring most in December, which industries stood out to you? Well, I think one of the notable gains was in construction that's a positive sign it shows as you were talking about the housing numbers the other day, that the residential construction sector continues to be a very good contributor to overall economic growth...a we also saw gains in government and we saw gains in business services. On the troubling side we saw retail employment drop. Now these numbers are seasonally adjusted so what that's telling you is a... while retailers are adding workers for the holiday season, they're not adding them at the same pace as they have in previous years so that's a little bit worrisome. Absolutely. Are there any other economic headwinds that you've see on the horizon that could potentially slow down the growth we've seen? Ah well, we certainly have a lot of uncertainty related to the political situation but so far the market have liked what they've seen from the Trump administration so that doesn't seem to be a big worry. The dollar has gained a lot of strength since Trump was elected partly because people are expecting fiscal stimulus, higher interest rates, that stronger dollar could be a negative for export industries and for manufacturing, which is kind of ironic, considering the emphasis that Trump has placed on both manufacturing and a ... and exports. I would say the final point to keep in mind here is that ... a the overall pace of job growth continues to be very strong, much stronger than what the economy can sustain in the long run given the fact that this is an aging country and the Federal Reserve is basically going to say: "we need to start moving interest rates back to normal level because we still have a labor market that is hotter than it can stand to be over the long term." Alright. Graig Ip, thank you so much for that analysis. Alright, Tanya, thank you.