Two economists from California made the following comments regarding this coming Friday’s U.S. Bureau of Labor Statistics’ non-farm payrolls employment report for March:
Robert Eyler, Board Member of Redwood Credit Union and Economist at Sonoma State University
- “Friday’s jobs report may be part of a larger trend as we begin looking back at the first quarter of this year. We will soon see whether or not the recent congressional tax bill has led to immediate business investment and higher wage offerings, and if these jolts did enough to attract entrants into the labor market who were sitting on the sidelines. If this is the case, then more jobs are getting filled by employers that have a larger labor force to draw from. However, whatever jobs number is announced, the second-half of this year could turn out different. Many economists’ employment forecasts going forward are less sanguine, especially with trade-war sabers rattling between other countries and the United States.”
- “The more the jobs report meets the economic forecast expectations by the Federal Reserve, the more the Fed will like it because it will be ‘on forecast,’ which means the Fed’s interest rate movement predictions for three movements higher (total) this year will hold steady. If jobs are above forecast, it could signal more speedy wage and price growth, giving the Fed cause to add an additional rate increase this year versus its original plan. But if jobs are below forecast, equity markets won’t like that, and it could keep the Fed basically on pace. My guess is that job growth in the first quarter of this year will meet or beat targets, but it will do so in such a way that the Fed will stick to its original plan and equity markets will be little affected.”
- “In general, employment numbers can be ‘noisy’ due to seasonality and structural shifts, so unfortunately the key to the monthly jobs announcement becomes whether it meets or beats expectations. Even when seasonal factors are taken out, the American economy generally hibernates a bit in the winter. But the recent congressional tax bill may help boost first-quarter 2018 economic growth (Gross Domestic Product—GDP). The current consensus forecast for the first quarter is between 2.4 and 2.7 percent economic growth, and maybe even as high as 2.9 percent growth for the past four quarters combined (annualized).This potential first-quarter result, if realized, would not only be on pace with recent quarters, it would be higher than many previous first-quarter results from prior years.”
- “For job hoppers and job seekers—and those entering the labor force for the first time or coming back after an extended period—the jobs are out there. The key is to continually stay certified, don’t stop completing new training courses, and engage in skills development. Don’t just drift back into the labor force without updating your skills, no matter how small it may be. This is an economy where it’s a great time to jump into the workforce if you have the right skills in place.”
Dwight Johnston, Chief Economist for the California Credit Union League
- “The bond market is almost solely focused on the hourly-wage growth component of Friday’s jobs report. But until there is more clarity on where the domestic trade scuffle is headed, the impact of Friday’s employment report will not be lasting. What’s interesting is, interest rates are actually lower than before the last big gain in non-farm payroll jobs of 316,000 in February and the Federal Reserve’s tightening.”
- “If an impending trade war or a real trade war between the United States and China is still afoot and the U.S. stock market is still tumbling by June, it doesn’t really matter how much wage growth or job growth we have. A trade war’s impact has consequences—to what degree if one happens, only time will tell. Some analysts believe Fed Chairman Jerome Powell will act differently from his predecessors and raise interest rates if the employment numbers dictate, regardless of the stock market’s movements. Just from experience, I’ll believe it when I see it.”
About California Credit Union League
The California Credit Union League is based in Ontario, CA and is the state trade association for 312 credit unions headquartered in California (as of fourth-quarter 2017). The League represents the interests of 11.5 million credit union members across the state who are member-owners of their credit unions. Credit unions help consumers afford life and prosper.
