I had expected 2017 to show modest growth due to a tighter labor market and the country nearing full employment. Here is what I wrote in my 2017 Predictions article in December of 2016.
“In fact, for 2017 I am lowering my job creation numbers again ( 3rd straight year of decline) to adjust for tightening of the labor market leading to a lack of labor force growth. We are in the early stages of a shift in demographics, when a massive group of ages 21-26, will enter the prime age labor force. This should add some much needed labor into the mix. However, look for job creation numbers monthly to come down to 140K-170K a month ,to account for labor force growth. I am still in the 1.9%-2.3% GDP camp.”
Today’s report is in line with a 3 month trend running at 178,000. The report also shows negative revisions to prior reports. Even so, the job market is still out performing my expectations.
As you can see in the graph above, the retail sector took the brunt of the job losses and professional business services showed the largest growth. We have all heard the stories of the closing of retail stores due to the Amazon impact. Even so, job openings in the retail trade sector are still healthy. February construction job growth was strong and was still slightly positive in March.
Unemployment for less than a high school education fell under 7% again and teenage unemployment rates are at a low last seen in 2001 at 13.7%. The unemployment rate in the U.S. is at 4.5% (anyone who has looked for work in the past month) and the U6 rate (the total unemployment of the civilian labor force plus those who have stopped seeking employment and those who are employed part time but desire full time employment) is under 9% for the first time in this cycle. The floor for the U6 rate is about 8%, so the current rate indicates nearly full employment of employable Americans.
As always, the streak continues and if we get to mid 2019 we will have the longest economic expansion and longest job streak combined ever in U.S. history
The 2017 jobs trend is looking better that I thought, above my 140K – 170K per month range. The last two months have been the worst for retail job loss since 2009, but this down side has limits. Nevertheless, the losses in this sector may be the nail in the coffin for the border tax because the retail trade would be impacted by that.
The reaction in the market to the missiles dropped on the Syrian airbase was a rise and gold and oil and a fall in the 10-year note last night.
Since the start of the year I have been saying that the 10-year yield will stay in a short term channel of 2.27% -2.62% for some time but stay still in a longer term channel of 1.60% -3%. It’s April 7th and that 2.27% – 2.62% level has stuck.
$TNX has managed to bounce now for 2nd time since post-Bombing overnight Yield weakness. 2.30% serving as ongoing important Support for 10s
Today, Friday morning after the Syrian news, the 10-year is 2.36% ( 10:36 Am Pacific time) so the bottom end of this channel is holding. I still believe we may see a 1 handle on 10-yea if oil breaks under $43 or global trade cools down from it’s recent hot pace.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami