Unemployment Rate Forecast

Economic Forecasts

Job Gains Slowing, Unemployment Dropping

Kiplinger’s latest forecast on jobs

iStockphoto

GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 170,000 per month in ’19 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.3% in ’19, up from 1.9% in ’18 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $50 to $55 per barrel in December More »
Housing 5.35 million existing-home sales, down 1.1% in ’19 More »
Retail sales Growing 4.3% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

September job gains of 136,000 were lower than expected, but still consistent with the new normal for the economy. Monthly job growth in 2019 is likely to average 150,000 jobs per month, down from 223,000 in 2018. Partly, that is because there are fewer available workers to hire, given the low unemployment rate. But mostly, the smaller gains signal that the economy is slowing down to a more moderate growth rate. The tax cuts’ stimulus to growth couldn’t last, and the trade war with China is keeping exporters and commodities-oriented industries from expanding.

The positive takeaways from the report: Wage growth for nonsupervisory workers stayed fairly high at 3.5%. The share of prime-age workers (25 to 54) who are employed is the highest since 2010. There were a few weak spots, as well: Retail shed workers for the eighth straight month as stores continue to close. Eleven of 19 manufacturing industries lost jobs, showing the impact of slowing exports. The telecom sector continued its long decline. Trucking experienced a surprise cutback for the second month.

The unemployment rate dropped to 3.5%, its lowest level since 1969. Job openings continue to exceed new hires. The short-term unemployment rate (which tracks folks who have been unemployed for less than six months) is at its lowest level since the Korean War in 1953.

Slower job growth is likely to allow the Federal Reserve to cut rates again on October 30, following cuts on July 31 and September 18. A softer jobs market gives the Fed some maneuvering room to cut rates without stoking inflationary pressures, since rapid job gains tend to lead to faster wage increases, which push up other prices.