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Economic Forecasts

Pace of Job Growth to Stay Moderate

Kiplinger's latest forecast on jobs


GDP 1.4% growth for the year; a 2% pace in '17 More »
Jobs Hiring at 150K-200K/month through '16 More »
Interest rates 10-year T-notes at 1.4% by end '16 More »
Inflation 1.7% for '16, 2.4% in '17 More »
Business spending Flat in '16, slight gain in '17 More »
Energy Crude oil trading from $40 to $45 per barrel in Dec. More »
Housing Prices up 5% in '16, 6% in '17 nationally More »
Retail sales Growing 3.4% in '16 and '17 (excluding gas) More »
Trade deficit Widening 4% in '16, after a 6.2% increase in '15 More »

Look for job growth to stay at a moderate level of 150,000 to 200,000 jobs per month for a while. In August, the number of new jobs fell to 151,000, following strong gains of over 270,000 for both June and July. That’s partly because the economy took a breather, but mostly because the hot employment market of the past few years is downshifting to a more sustainable pace.

See Also: All Our Economic Outlooks

The slightly soft report will likely prevent the Federal Reserve from raising interest rates at its September 21 meeting. A better bet for the hike is December 14, the Fed’s first meeting after the presidential election.

August hiring slacked off most notably in durable goods manufacturing, nonresidential construction and employment services. But more folks continued to reenter the labor force, indicating continued optimism about finding work. The unemployment rate was steady at 4.9%, but by the end of next year, we see it down to 4.5% as unfilled job openings keep rising and demand exceeds supply, especially for skilled workers. Still in short supply: workers with various technical skills, restaurant and food industry workers, and construction workers in housing.


See Also: All Our Economic Outlooks

The tighter labor market will continue to push up wage rates, though wage growth slowed a tick in August. The Bureau of Labor Statistics survey didn’t include the 15th of the month, an important pay date, and the omission could have biased wage growth down slightly. Average hourly earnings rose 2.4% from a year ago and are likely to continue to edge upward, hitting 3% growth sometime next year. Some industries are seeing wages rise even faster. Restaurant worker earnings, for example, are rising at a 4% clip.

SEE ALSO: Best Jobs for the Future

Source: Department of Labor, Employment Data