The Trump Expansion Continues to Deliver Jobs
The US economy has delivered steady, modest gains for most Americans since the Great Recession ended in Y 2009.
President Trump’s policies have extended what is now the 2nd-longest economic expansionon record and why more of the country might soon benefit from higher pay.
The government said Friday that employers added 164,000 jobs in April, the 91st month running of hiring growth, the longest run on record.
More tellingly, the unemployment rate fell to 3.9% the lowest since December 2000, just 8 years ago, the jobless rate was 10%.
The economy’s modest growth has helped prevent it from overheating and skidding into another recession, as often happened during more robust expansions. And some economists say the ever-lower unemployment rate suggests that a wider swath of Americans soon stand to benefit from stronger pay growth.
Average hourly earnings have risen 2.6% from a year ago. That is more than Y-Y wage growth of roughly 2% that prevailed in Y’s 2014 and 2015, when the unemployment rate was higher. Yet by historical standards, wage growth has been relatively stagnant.
That may explain why the pace of job growth was slower in March and April: There are not enough unemployed people to fill openings.
The job market is getting competitive, and people are able to request higher wages.
An encouraging sign for the economy is that the pace of hiring has yet to be disrupted by dramatic global market swings, a recent pickup in inflation or the risk that the tariffs being pushed by President Donald Trump.
Much of the economy’s durability is due, in fact, to the healthy job market.
The increase in people earning paychecks has bolstered demand for housing, even though fewer properties are being listed for sale. Consumer confidence has improved over the past year. And more people are shopping, with retail sales having picked up in March after 3 monthly decliners.
With qualified job applicants harder to find in many industries, employers have become less and less likely to shed employees. The 4-week MA for people applying for 1st-time unemployment benefits has reached its lowest mark since Y 1973.
Many companies expect the economy to keep expanding, especially after a dose of stimulus from tax cuts signed into law by President Trump that have also increased the federal budget deficit.
The Fed has set an annual inflation target of 2%.
Investors expect the Fed to raise rates at least 2X more this year, after an earlier rate hike in March, to keep inflation from climbing too far above that target.
The April jobs report suggests that inflation may remain tame, which means the Fed might not raise rates more than three times this year.
Slower job growth with little sign of inflation pressures is just what the doctor ordered to keep this economic expansion on track without a serious case of overheating.
Have a terrific weekend