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Economy Hits a Milestone: What to Look for in Friday’s Jobs Report

Andrew Chamberlain

Andrew Chamberlain

Andrew Chamberlain, Author at Glassdoor US | Mar 7, 2017

This Friday’s February jobs report offers an early glimpse of how the economy fared during the Trump administration’s first full month at the helm. Here’s what we’ll be watching for in Friday’s February report from the BLS:
  • 173,000 new jobs added to nonfarm payrolls in February.
  • Unemployment rate down to 4.7 percent.
  • Average hourly wages up 2.7 percent from one year ago.
  • Labor force participation rate down to 62.8 percent.
It’s been about a month since President Trump took office, and this month’s jobs report will be scrutinized to see if the good times will last. Early indicators of a pullback likely won’t show up in the jobs numbers, however, as the labor market is one of the last places we usually see signs of a downturn. So far, all signs point to a healthy and stable job market, and we expect to see that reflected in Friday’s report. Hitting A Milestone During the mid-1980s, America enjoyed one of its longest-ever peacetime economic expansions. Fueled by a booming real estate market and two major federal tax cuts, the U.S. economy grew for 92 consecutive months from November 1982 until July 1990. This month, the U.S. economy matches that historic milestone. As of February, the current economic expansion hits 92 months since the last recession ended in June 2009. That’s not the longest U.S. expansion on record – it’s still behind the 120-month expansion of the 1990s and the 106-month expansion of the 1960s. But it’s the third longest, and yet another historic milestone for today’s steady, albeit slow-growing, economy. That raises an obvious question: When might we hit another recession, ending today’s long economic expansion? History reminds us that every expansion comes to an end. Since WWII, the average life of an expansion has been about 58 months. By that measure, today’s economy is about 34 months overdue for a severe hangover. Or is it? Expansions don’t simply die of old age. For example, Australia’s economy has gone more than 25 years without a single recession. In the U.S., good economic times have historically ended in recession from one of three big factors: an oil price spike, the collapse of a speculative asset bubble, or a big rise in Federal Reserve interest rates. Of those three factors, most economists consider rising Fed interest rates the riskiest factor to watch over the next year. For now, it’s likely America’s economic expansion will continue. All signs point to continued strength in the labor market. Consumer sentiment is up, new claims for unemployment insurance are near historic lows, stock markets are up, job openings are near record highs, and there’s no obvious sign of slowing in Glassdoor’s real-time job openings or pay data. For these reasons, we’re expecting to see healthy job gains in Friday’s jobs report, with 173,000 new jobs added to nonfarm payrolls in February and an unemployment rate dipping down to 4.7 percent. The Wage Picture By almost every measure of U.S. pay growth, the story is the same. Wages have been growing at historically slow rates since the end of the Great Recession in 2009. However, as the labor market has strengthened during the past year the pace of pay growth has accelerated, rising from an average of 2.1 percent in during 2014 to an average of 2.6 percent last year. Last month’s jobs report showed lackluster wage gains, with average hourly earnings up just 2.5 percent from one year ago. That’s down from the revised 2.8 percent wage gains in December. This month, we expect pay growth in the BLS report to accelerate to around 2.7 percent year over year, thanks to a continued robust labor market and a near-record number of unfilled jobs at 5.5 million nationally. We see a similar story reflected in our data. According to Glassdoor’s salary data, the February Local Pay Reports show U.S. median pay for full-time workers rose 2.9 percent from a year ago, a strong gain but slightly down from the 3.1 percent pace we recorded in January. Gains were particularly strong in Chicago and Los Angeles, while San Francisco lagged behind the U.S. average for the first time in more than two years. Read our full analysis of the latest pay growth indicators based on Glassdoor salary data here. To speak with Dr. Andrew Chamberlain about this month’s jobs report or labor market trends, contact pr [at] glassdoor [dot] com. For the latest economics and labor market updates, subscribe to email alerts here and follow @adchamberlain.
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Andrew Chamberlain

Andrew Chamberlain

Tags:Labor Market

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