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Good stuff! The US economy generated 209,000 jobs last month. That’s a bit stronger than analyst expectations and above the average monthly jobs gains so far this year.
Think of it this way: The current expansion is the third-longest ever with 82-straight months of job growth. And while job growth is slowly easing back — at 179,000, the average monthly gain over the past six months is slightly weaker than 2016’s 187,000 average — it’s still on a 2-million-a-year pace. Not bad at all.
More good news: Both the employment and participation rates ticked higher, yet the official jobless rate slipped back to 4.3%. Average earnings rose by 0.3% on the month, though they are still only 2.5% higher than a year earlier. But with inflation low, there still seems to be plenty of buying power when you add in hours worked. “Moreover, there is early evidence that wage gains may have accelerated a little over the past five months,” note IHS Markit.
Here’s the Wall Street take from Barclays bank:
Employment gains remain solid and have slowed little despite the beginnings of Fed policy normalization. It has been our long-held view that employment gains would remain sufficient to keep the unemployment rate in a downward trend, as has been the case in prior expansions. … The rise in participation prevented a larger unemployment rate decline. … We continue to forecast that the participation rate will largely move sideways and further growth in employment should push the unemployment rate below 4.0% next year, if not sooner. … Economy-wide income growth remains healthy. The payroll proxy, which is the combination of total hours worked and average hourly earnings, is up 5.8% in Q3 over the Q2 average and continues to run well above the pace observed in Q1 (2.4%). Hence, the income implications of today’s report leave us comfortable with our outlook for 2.5% GDP growth in Q3.
(Politics junkies might want to note the above bit in bold.)
So what does the US economy need right now? Probably nothing that smacks of fiscal stimulus — say deficit-worsening, temporary tax cuts — although I might move slower than the Fed to raise rates. Policymakers should be thinking long-term, thinking about deep structural reform. What sorts of tax, regulatory, spending, trade, and immigration policies are best for sustained growth that benefits folks up and down the income ladder? And I as write in my new The Week column, Silicon Valley may be ready to give this economy a powerful tailwind though greater innovation-driven productivity growth.Published in