Economic Take

The labor force participation rate has dropped 3 percent in the past decade, leading some economists to reason there are many people who have yet to return to the job market. But with low unemployment and the full recovery of participation for people in their prime working years (25-54 years old), the overall decrease is likely due to the outsized retirement of baby boomers. Pay more attention to the steady trends in jobless claims to help chart the future course of the economy.  

The latest economic news cycle has featured heartburn-inducing reports of Chinese supply-chain disruptions, energy sector headwinds and the first hard numbers on the impact of Boeing’s suspended jet production. However, a closer look at jobless claims—a more reliable economic measure—should relieve worries about growth prospects.     

January’s jobs report was impressive, pointing to a robust job market that should make it easier to weather upcoming storms. Three things you probably didn’t hear about from the jobs report: revisions showed more businesses were hiring last year than originally estimated despite worrisome economic rhetoric, the amount of working-age people in the workforce is back up to the highs of two decades ago, and unemployment rose—in a good way.  

As the coronavirus from China stifles short-term economic output, an otherwise unsurprising fourth-quarter GDP report gives perspective on long-term US economic health. Two takeaways on the data: demand for American-made goods could pick up by summer and even the slower pace of US economic growth in 2019 was enough to shrink unemployment.  

The temporary shutdown of production on the 737 Max 8 planes could cause serious problems for workers in areas where the aircraft industry has a big footprint. Fortunately, last week brought optimistic news for Boeing. Also this week: the economic impact of the coronavirus outbreak, breaking down a congested economic calendar and a status report on the Tax Cuts and Jobs Act of 2018.  

Mild winter weather can sometimes exaggerate economic indicators—from December’s spike in housing starts to its drop in industrial output. Seasonal fluctuations aside, last week’s numbers were impressive, especially the amount of people applying for unemployment benefits and jobless claims, which plunged close to its lowest level in the past year. Also this week: How the signing of the US-China Phase 1 trade agreement may affect the economy’s growth in 2020.  

The still-dropping unemployment rate and the solid state of consumers are giving the US economy a lot of momentum at the start of 2020. Also this week: why much of credit card spending has more to do with convenience than households’ growing debt obligation.  

December job numbers take the top spot—employment gains were a bit soft, but this pattern has shown up before when Thanksgiving falls late in the month. This hiring slowdown may continue in 2020 if the unemployment rate remains low. Also this week: A wrap-up of other economic news from the holiday break.  

A lot happened last week, from the House signing off on the USMCA to the suspension of additional tariffs on China and Boris Johnson’s Conservative Party winning by a landslide in the UK election. Also, a look at this week’s economic calendar, which includes a second revision to the Q3 GDP estimate and slightly elevated jobless claims.   

The hot job market has academic economists—and the Fed—talking about the benefits of a high-pressure economy. However, it’s probably only a matter of time before job growth slows for natural  reasons. What this means is we should focus more on unemployment trends as the economy transitions to steady-state. Tags:,Job Growth, High-Pressure Economy, Jobless Claims,  Economic Trends

As 2019 comes to a close, the stock market continues to break records, unemployment remains low and inflation pressures are absent. Will this steady-state growth continue in the new year? The labor market and monetary policy could hold clues for what to expect in 2020.

Last week, the Fed released its quarterly Financial Stability Report, which monitors four financial vulnerabilities that could cause widespread problems in times of stress. Thankfully, the Fed’s assessment is that the financial system remains well-balanced, and inflation is not posing a threat today as it did on the eve of past recessions.    

Business investment trends—the spending that supports business revenues far into the future—get a lot of attention among the economy-watching community. This year’s slowdown is a big story, but there might be more to it than meets the eye.

In a surprising twist, Federal Reserve Chair Jerome Powell said he doesn’t expect to raise rates until core inflation moves above 2 percent on a sustained basis. This could represent an important innovation in the Fed’s management of the economy.

The Federal Reserve appears to be taking a timeout after its rate cut last week. With the October jobs report stronger than expected given the GM strike, all signs seem to support the Fed’s decision to sit back and monitor the situation—at least for now.