Wednesday, 16 Jan 2019

That's why you should not be afraid that job growth has slowed down

We are so used to real remarkable work that we can hardly remember what a very good job is. Well, at least until now.

Indeed, according to your point of view, the November employment figures were either the very definition of solidly unusual or not very solid: the economy created 155,000 decent jobs, wages rose by 3.1% last year and unemployment remained at a satisfactory level. nearly 50 years, 3.7%.

We can certainly do a lot worse. At the same time, it is true that we can and have done better recently. After all, the 155,000 jobs we added in November were far less than the 210,000 we had on average in the previous three months. But there are many reasons why you should not worry too much about it. The first is that it is far too early to tell if the job growth actually slowed last month and, if so, whether it will continue. You see, these numbers have such a large margin of error that you never want to try to read too much in one job report. Maybe this is going to be revised, or maybe not, but it will simply be a whim to get back to our previous trend. We will not know the past before the future.

Second, since most job seekers get one, we expect job growth to slow anyway. The problem is that there is no way to say for sure when it will happen. Many economists thought that this would be the case when the unemployment rate will be 5%, then 4.5% and finally 4%, but the growth of employment continues to grow at about the same rate as All the time. The fact that wage growth has now begun to accelerate, which should happen when employers have to fight against a reduced number of potential workers, tells us that we may be on the spot soon, but only.

Indeed, the economy could still have some 200,000 jobs – a monthly growth, since even now the labor market seems to have more leeway than it would with an unemployment rate of 3.7 % only. On the one hand, the number of people who are looking for a full-time job but can not find that a part-time job has actually increased last month – that's why the unemployment rate more Overall rose from 7.4% to 7.6% – and did not drop much in the last year either. And, on the other hand, the proportion of people aged 25 to 54 who, in your opinion, would not be at the beginning of their working lives and who did not return to their level of education. 39, before the bursting of the real estate bubble, not to mention the record set before the tech bubble.

All of this to say that we do not know when the economy will stop creating 200,000 jobs a month, but it will not be the end of the world – or the recovery – when it does, and starts creating 150,000 jobs per month instead. It is this kind of slowdown that is supposed to occur when the unemployment rate is so low, but it is still fast enough to continue to drive down unemployment.

The challenge for the Federal Reserve is to determine if that means it needs to continue to press the brakes or if it can afford to just leave the car of our coastal economy for a while. The stakes could not be higher for Americans of the working class in particular. Why is that? A tight labor market is the best social program for them. Like Martha Gimbel highlights, it is the low-income workers who have had the largest increase over the past year. That's why it's so important to maintain the recovery as long as we can.

This is a case where enough would be enough – if the Fed let it.


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