Unemployment Rate Forecast

Economic Forecasts

Slower Job Gains Are the New Normal

Kiplinger’s latest forecast on jobs


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 5% in ’19 as global growth slows More »
Energy Crude trading from $50 to $55 per barrel in October More »
Housing 5.35 million existing-home sales, down 1.1% in ’19 More »
Retail sales Growing 4.5% in '19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Slower July job gains of 164,000 likely represent the new normal. Growth in 2019 is likely to average 170,000 jobs per month, down from 223,000 in 2018. Partly, there are fewer available to workers to hire with the low unemployment rate. Also, businesses are going to be reluctant to aggressively pursue growth, given increasing economic uncertainty from the intensifying trade war with China.

Health care hiring was robust, once again. Services associated with a growing economy, such as computers, restaurants, and temporary help, were also up. There were a few weak spots as well: Retail has shed workers for the sixth straight month as stores continue to close. The telecom sector also continues its long decline. The drop in oil prices has led to job cuts in the oil and gas sector.

The labor market is still tight, with a low unemployment rate of 3.7%. This is just a tick above the lowest rate in 50 years. Job openings continue to exceed new hires. The short-term unemployment rate (those unemployed for less than six months) is near its lowest level since the Korean War in 1953.

Nonsupervisory workers’ paychecks rose at an annual rate of 3.3% in June. The tight labor market has boosted pay growth, though rate increases have been stuck at this level for a while. Companies may be reluctant to engage in bidding wars while the strength of the economy next year is uncertain.

Slower job growth and the lid on wage growth are likely to allow the Federal Reserve to cut rates once again this fall, after cutting them on July 31. This gives the Fed some maneuvering room without stoking inflationary pressures.