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Economic Forecasts

Big Job Gains in February Reflect Strong Economy, Warm Weather

Kiplinger's latest forecast on jobs


GDP 3.0% pace in '18, up from 2.3% in '17 More »
Jobs Big job gains will continue, but reflect a strong economy More »
Interest rates 10-year T-notes at 3.3% by end '18 More »
Inflation 2.6% in '18, up from 2.1% in '17 More »
Business spending Up 7% in '18, boosted by expanded tax breaks More »
Energy Crude trading from $55 to $60 per barrel in April More »
Housing Existing-home sales up 1.6%, new-home sales up 9.8% in '18 More »
Retail sales Growing 4.7% in '18 (excluding gas) More »
Trade deficit Widening 5%-6% in '18 More »

Most of the 313,000 jobs added in February — a huge number — reflect a strong economy. Some reflect warm weather that pushed up hiring in construction and retail establishments. But the February report, which follows a strong gain of 239,000 in January (which was unusually cold), indicates that the robust economy is for real, regardless of what the first-quarter GDP number will show when announced on April 27.

We expect monthly job growth to slow this year, reflecting a shrinking labor force. Since peaking at 250,000 per month in 2014, the economy has added fewer jobs each year as the pool of workers has steadily shrunk because of flat population growth. Although February’s large job gains were made possible by a jump in labor force participation, it is unlikely that this will be the case every month.

February wage growth for nonsupervisory workers showed a gradual upward trend. The rate was 2.5%, rising from 2.3% in December. This demonstrates that the labor market is tightening. (The nonsupervisory wage rate is a better measure of trends than the all-worker wage rate is.) Expect wage growth to slowly pick up to near 3% by year’s end.

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January’s reported strong wage growth for all workers was misleading, as we expected. News that paychecks jumped to a 2.9% yearly growth rate stoked Wall Street’s fears that the Federal Reserve would respond to impending inflation with faster interest rate hikes, helping to initiate a short-lived market correction. The February report showed all-worker wage growth declining to 2.6%.


Unemployment held at 4.1% in February. Look for 3.8% by the end of 2018 as it becomes harder for employers to find suitable candidates. The short-term unemployment rate (less than six months) has fallen to its lowest level in 65 years.

See Also: The Best Jobs for the Future

Source: Department of Labor, Employment Data