While the December employment report certainly carried good news — job growth last year was the strongest since 1999 — trouble lurks beneath the surface, economists say.
Average hourly wages rose just 1.7 percent in the 12 months through December, the weakest gain since October 2012. And the labor force participation dipped to 62.7 percent in December, matching the lowest level in 36 years.
But that probably won't stop the Federal Reserve from raising interest rates, says Peter Boockvar, chief market analyst at The Lindsey Group.
"Yes, wage growth continues to be lackluster, but the Fed won't likely wait to see the whites of its eyes,"
he wrote in a commentary obtained by CNBC.
"The continued drop in the unemployment rate is further signs of labor market tightening, and another drop in the participation rate is clear evidence that the slack the doves are relying on is just not there." The unemployment rate slid to a six-year low of 5.6 percent in December.
Most economists expect the Fed to begin increasing rates around mid-year. It has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
The weak wage and labor participation data "highlighted continuing lines of attack Republicans will be able to make as they craft economic policy in the new Congress and hit the trail for the 2016 presidential campaign," Ben White, Politico's chief economic correspondent, wrote on
CNBC.com.
"The long-awaited rise in wages still shows few signs of actually materializing, . . . [And] the overall trend in participation will be very much a Republican talking point over the next two years."
To be sure, there are plenty of economists who view the December numbers optimistically.
"We have continued, solid job growth,” Michael Feroli, chief U.S. economist at JPMorgan Chase,
told Bloomberg. "It shows really solid momentum in U.S. growth. There are not a lot of places in the world where we see that these days."
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