December 7, 2022

In Friday’s broadcast of CNBC’s “Squawk Box,” University of Chicago Booth School of Business economics professor Austin Goolsby, who served as chair of the Council of Economic Advisers under President Barack Obama, praised the number of jobs added in July, but noted that if the GDP is going down at the same time, more jobs are being added, “that should mean productivity is going down,” and we are likely “to see a continuation of this kind of negative real wage growth.”

Goolsby said, “I mean, that’s an astonishing number. There’s never been a time the unemployment rate has fallen this low, where we’ve added 500,000 jobs. I mean, I think given all the rate increases, we’re likely to be disappointed or missed. You’ll never hear me criticize a job number where we’ve got half a million jobs. I would like to highlight that there are two areas, not weakness, but risk. One, if there is a contraction in GDP when jobs are added at this kind of rate, that means productivity is declining And if productivity is going down, what that means for wages isn’t great. And so, you’re likely to see a continuation of this kind of real negative wage growth. But the second thing is that this is basically unstable. There aren’t enough people to keep adding 500,000 jobs a month. So, in a very quick order, this is — it has to stop. We have to get to what is de facto full employment, and then the numbers are not going to be huge. And so, people can’t be surprised when that happens.”

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