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Economic Forecasts


Job Growth Rebounds in June, but More-Moderate Growth Ahead

GDP 1.8% growth for the year, down from 2.4% in '15 More »
Jobs Hiring slowing to 150,000/month by end '16 More »
Interest rates 10-year T-notes at 1.4% by end '16 More »
Inflation 1.8% for '16, up from 2.4% in '17 More »
Business spending 4% gain in '16, after drop in '15 More »
Energy Crude oil trading from $40 to $45 per barrel in Sept. More »
Housing Prices up 5% on average in major metro areas More »
Retail sales 4% growth in '16, compared with 4.8% in '15 (excluding gas) More »
Trade deficit Widening 4% in '16, after a 6.2% increase in '15 More »

Expect slower job growth in the months ahead, despite the strong addition of 287,000 jobs in June that represented a huge bounce back from just 11,000 new jobs a month earlier. Monthly job growth is likely to range from 150,000 to 200,000--less than the average 229,000 jobs added per month in 2015.

See Also: All Our Economic Outlooks

The resumption of hiring in the retail, food service, hotel and temporary help sectors after a skid in April and May eases fears of an abrupt slowdown, but we still expect a more moderate slowdown because qualified employees are becoming harder to find. The rate of job openings is the highest in 15 years, but the hiring rate has stabilized. Skilled technical workers, restaurant help and workers in the construction trades are in short supply in some hot metro areas as home construction picks up, and the strong rise in disposable income for consumers has led to expansion of the restaurant and fast-food industry.

Some who have left the labor force will come back to look for a job. That’s the reason the unemployment rate rose to 4.9% in June. But not enough of them with the right skills and in the right locations. As a result, the unemployment rate will likely stay below 5% the rest of the year. And the broadest measure that includes both the unemployed and those working part-time who want full-time work will continue on its downward path. It is now at 9.6%, down from 10.5% a year ago.

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The tighter labor market is beginning to push up wages. Average hourly earnings rose 2.6% from a year ago and are likely to continue to edge upward.

The June gain would normally make it easier for the Federal Reserve to raise interest rates, but we think it’ll hold off for other reasons: The lingering uncertainty introduced by Britain’s decision to exit the European Union and problems in the global economy, along with the expected rise in the value of the dollar in the second half of the year.

SEE ALSO: Best Jobs for the Future

Source: Department of Labor, Employment Data

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