The underlying strength of the economy remains apparent on a number of fronts, not the least of which is clearly visible in labor market conditions.
Job creation remains strong, even as the jobless rate sits near its lowest point in seventeen years and the pool of untapped workers continue to dry up.
In such a competitive labor market environment, and with growth prospects still looking good, employers are understandably hesitant to trim their payrolls.
Initial claims for Americans applying for first-time unemployment insurance edged higher by 3,000 to 229,000 for the week ended March 17, coming in above expectations for 225,000. The four-week moving average also edged up to 223,750. Both remain near 50-year lows.
The economy appears to be well entrenched in a virtuous cycle, with growth contributing to job creation, reinforcing an optimistic consumer outlook, which is supporting further spending.
One increasing risk is that economic growth could falter if job creation stalls due to an inability of employers to find qualified candidates. Better productivity growth could certainly help to support growth, but the entry of new workers into the jobs market could also provide a boost by increasing the size of the labor force. That’s precisely what occurred in February, as an increase in the labor force participation rate reflected a surge in workers entering the labor force, keeping the jobless rate unchanged at 4.1%, despite outstanding job creation during the month.
All things considered, labor market conditions remain strong, indicative of robust economic growth nearly nine years into the current expansion. While the Fed continues down the path of gradual tightening, monetary policy remains generally accommodative, and the economy should get an additional boost from fiscal policy over the course of 2018 and beyond.
The bottom line is that the economy appears to be very much on track, with seemingly little risk of being derailed in the near term. That bodes well for employment conditions and household spending in the coming months.
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