The headline 3.9% unemployment rate looks positive, but job creation fell significantly below consensus, at 199,000 in December versus a consensus estimate of 450,000.

The weak jobs figure should be viewed in the context of the largest stimulus plan in recent history. With massive monetary and fiscal support and a government deficit of $2.77 trillion, the second highest on record, job creation falls significantly short of previous recoveries and the employment situation is significantly worse than it was in 2019.

The most alarming datapoint is that real wages are plummeting. Average hourly earnings have risen 4.7% in 2021, but inflation is 6.8%, sending real wages to negative territory and the worst reading since 2011.

The number of persons not in the labor force who currently want a job did not change in December, at 5.7 million. This is still 717,000 higher than in February 2020.