Job Gains Great in February, Likely Not in March

• GDP
• Unemployment
• Interest Rates
• Inflation
• Business Spending
• Energy
• Housing
• Retail Sales
• Trade Deficit

At 273,000, job gains were very strong for the second month in a row in February. As usual, health care, social services and food services led the way. Mild weather helped construction hiring for the second month. Government hiring was stronger than usual. The only downside was retail, which lost jobs for the second month. The unemployment rate dipped to 3.5%. Wage growth was stable.

This is likely the last good jobs report for a while. The beginning of the spread of the coronavirus in the United States is likely to weigh on services employment, and shortages of parts and inputs from China will likely slow manufacturing in the next several months. It is likely the global economy is going to slow down more, which will hurt U.S. manufacturing firms that export.

Monthly job growth in 2020 before the virus was already likely to average only 150,000 hires, down from 175,000 in 2019 and 193,000 in 2018. Partly, that is because there are fewer available workers to hire, given the low unemployment rate. But the likely severe slowdown in the United States and worldwide this year will likely push that number even lower.

Wages continued to grow at a moderate 3.3% rate for nonsupervisory workers. Wage increases are likely to slow further as the economy weakens, creating little chance of a pickup in inflation. That makes it even more likely that the Federal Reserve will cut interest rates again at its meetings on March 18 and later this spring, eventually bringing the short-term interest rate down to zero.