What to watch on Jobs Day: The year in review

The last jobs report for 2016 comes out tomorrow, giving us a chance to step back and put the entire year in context. Because there is always a bit of volatility in the monthly data—especially in the household series—taking a year-long approach allows us to smooth out the bumps and take stock of all the key measures: payroll employment growth, the unemployment rate, the employment-to-population ratio, and nominal wage growth.

This week’s jobs report will also give us a great vantage point to compare December 2016 to December 2007, the last peak year before the Great Recession hit. The unemployment rate continues to fall, and is now far below where it was at its peak (10.0 peak), and even below where it was when the recession began (5.0 percent). The prime-age employment-to-population ratio has been digging its way out of a deep hole over the last several years as well, but progress in this measure has been slower. It is expected to improve as the economy strengthens and more would-be workers return to the labor market and find jobs. Nominal wage growth has also seen some improvements recently, increasing from an average rate of growth of about 2.0 percent in the first few years of the recovery to 2.5 percent average growth over the last year, but it’s still well below levels consistent with the Fed’s target inflation and trend productivity growth.

If December’s numbers are in line with payroll employment growth over the last several months, it will be further evidence that the economy is continuing its march towards full employment. Unfortunately, the return to a full employment economy—one where additional demand in the economy will not create more employment—has been slower than necessary. It faces an uphill battle against a relentless pursuit of austerity at all levels of government and, after rightfully holding off for the most part, Federal Reserve policymakers appear to be putting on the brakes prematurely. For the recovery to truly reach all workers and their families across the country—across race, ethnicity, and levels of education—we need to get back to full employment.

It remains to be seen what, if anything, President-elect Trump will do to strengthen the economy for working people. On net, it could go either way. But all measures, the next president is inheriting an economy far stronger than the last and one that, if left alone, will continue to heal.