As I write this, the big news today is the February 2019 jobs report. The Bureau of Labor Statistics reports that just 20,000 new jobs were created in February – the lowest monthly number since May of 2016 (15,000).
Does this mean the end of the recent economic boom? Probably not. The USA has seen positive job growth every month since September 2010. The highest gaining month during this period was January 2012 with 355,000, and the lowest was May 2016 with just 15,000 new jobs.
Let’s take a look at what happened in the wake of May 2016’s dismal gain of just 15,000 new jobs. In the 12 months that followed, the lowest gaining month reported 127,000 new jobs with the average being 199,750 per month. Clearly, May 2016 did not in any way trigger the end of the economic expansion.
It is important to observe that December and January new-job gains were far above average – 227,000 and 311,000 respectively, putting the 3-month average of 186,000 squarely in the ‘normal’ range of the past 8 years.
Analysts point out that 20 million jobs have been added in the past decade and we may simply be reaching the end of the worker supply. Others remind us that the government shutdown, which lasted the entire month of January, sidelined many private contractors, causing a near-500,000-worker jump in unemployment. Part-time workers seeking full-time employment also jumped substantially as a result of the shutdown, a condition that postponed hiring in both the public and private sectors.
A final influence may have come in the form of taxpayer reduced discretionary spending in the first quarter as everyone finds their footing with the new tax-code. Tax filers, uncertain of their final 2018 tax bill, may be postponing discretionary purchases until they determine how they fare under the new law.
On the brighter side of February economic reports is wage growth. The year-over-year growth of hourly pay for the average employee grew to 3.4% in February. This is a 10-year high with the month-over-month change being the most rapid rate of increase since 2009. With inflation having fallen to just 1.6% this translates to real wage increases, not simply a cost-of-living increase.
While the jobs report is mildly disappointing, the overall state of the economy remains very good by most measures.
Ben Messinger, CFP®