Economic Outlook

The U.S. labor market remained extremely tight throughout 2022. According to the Bureau of Labor Statistics, 4.5 million jobs were added in 2022 and unemployment was at 3.5% for December, which is a significant drop from when it historically peaked at 14.7% in April 2020. The current unemployment rate, on track with pre-pandemic levels of 3.5%, is expected to increase as the coming 12 months unfold. According to the jobs report, hourly earnings increased by 5.1% on average over the last year. Additionally, the labor force participation rate in December was 62.3% and remained roughly the same throughout the year.

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COVID-19 Recession

The coronavirus pandemic has caused significant hardship to the U.S. economy. From the very beginning of the crisis, the labor market was severely disrupted, sending the unemployment rate to record highs and causing millions of Americans to leave the labor force. Congressional Research Service data shows, that in April 2020, the unemployment rate reached 14.8%—the highest rate observed since data collection began in 1948, and nonfarm payrolls shed 22.1 million jobs between January 2020 and April 2020. Many individuals left the workforce over this period, and by April 2020 the labor force participation rate declined to 60.2%, a level not seen since the early 1970s.

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Wrapping up the end of a recession-free decade

The U.S. labor market in 2019 can be described as historically record-breaking.  It surpassed Economists' predictions, reflected a surge of strength, and has been the greatest job market since the late 1990s. For an entire decade, the first time in history, there was no report of an economic recession. The unemployment rate in December 2019 dipped to a half-century low (3.5%), the lowest it’s been since September 1969. And the economy has been stable and steady for 126 consecutive months, adding thousands of jobs in a variety of sectors, including health care, professional and business services, manufacturing, transportation, and much more.

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