Down goes the U.S. unemployment rate in 2022, contends J.P. Morgan chief U.S. economist Michael Feroli.
"I think by the end of the year [2022] we could see the unemployment rate around 3%," said Feroli on Yahoo Finance Live. "It's stunning to see how much the rate has fallen in the last five months. We expect that pace of decline to slow, but it doesn't take much to get below 4%. Even with a tick up in the labor participation rate which has been depressed over the last year and a half."
To Feroli's point, the jobs market is likely to enter 2022 with solid momentum as employers seek out talent to drive business recoveries from the pandemic.
November non-farm payrolls increased by 210,000, the Labor Department said earlier this month. Job gains were notched in the professional and business services, transportation and warehousing, construction, and manufacturing sectors. Employment for September and October were upwardly revised by 82,000.
The unemployment rate dipped 0.4% to 4.2% in November. In January, the unemployment rate stood at 6.3%.
A solid job market has Feroli looking for 3% U.S. GDP growth next year. The veteran economist thinks the Federal Reserve will begin hiking interest rates in September to counteract inflation, which in part is being fueled by tight labor market conditions.
"I think the overall picture for next year is favorable [for wages and inflation]," adds Feroli.
A key risk to the jobs market remains the Omicron variant and whether it slows the hiring plans of companies down.
"This has been a very difficult time for a lot of people. Families have been concerned about their health. Families have lost loved ones. Families have lost their jobs. There's a lot of uncertainty right now," conceded U.S. Labor Secretary Marty Walsh on Yahoo Finance Live.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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