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Economic Forecasts

Moderate Job Growth as Labor Market Tightens

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 1.9% by end '17 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 More »

Job growth should stay below 200,000 monthly for a while as the labor market tightens. In September, 156,000 jobs were added, following a gain of 167,000 in August. The hot employment market of the past few years is downshifting to a more sustainable pace.

A sign of optimism: The unemployment rate ticked up to 5.0% as more folks came into the labor force to look for work. Other positive signs from the September report: The number of part-time workers looking for full-time work declined as more succeeded. The average workweek ticked up to 34.4 hours. Wage growth picked up to 2.6%, from 2.4% in August. Job growth was widespread across industries, with good growth in retail, professional and business services, health care, and food service. The temporary help sector, which tends to be a leading indicator, bounced back from an August dip. And the mining sector added 200 jobs, its first gain in nearly two years. The only worrisome sign was that manufacturing posted a small loss again, indicating that this sector is still not out of the woods.

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Another sign of tightening: Initial unemployment claims are very low. The four-week average of initial claims dropped to its lowest level since 1973. The reduction in newly unemployed workers is likely to cause the unemployment rate to drop further, to about 4.5% by the end of 2017, despite the return of folks newly classified as unemployed because they started a job search after not looking for a long time.


The positive labor market reports will likely help the Federal Reserve justify raising interest rates at its December 14 meeting. A hike on November 2 is unlikely, given that it is six days before the presidential election.

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Source: Department of Labor, Employment Data