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Economic Forecasts

March Snowstorms Cut Into Job Growth

Kiplinger's latest forecast on jobs

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GDP 2.1% growth in ’17, following 1.6% in ’16 More »
Jobs Hiring pace should slow to 160K/month in '17 More »
Interest rates 10-year T-notes at 3% by end '17 More »
Inflation 2.5% in '17, up from 2.1% in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude trading from $47.50 to $52.50 per barrel in August More »
Housing 5% price growth by end of '17 More »
Retail sales Growing 4.1% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Only 98,000 net jobs were added in March, as a result of an East Coast blizzard during the survey week. Also, some construction hires came earlier this year, given abnormally warm weather in January and February. Average monthly job gains for the first quarter of 2017: 178,000, not too far from our estimate of 175,000 average for the full year. We had expected job growth to slow this year because as the labor market tightens, it becomes harder for employers to find suitable candidates.

The unemployment rate dropped to 4.5%. This is the lowest since 2007, when it hit 4.4%. The rate will likely end the year at 4.5%, but next year it should head down more, nearing 4%.

Other signs of labor market tightening: The number of long-term unemployed individuals declined, along with the number of people working part-time who want to work full-time. The unemployed and underemployed together totaled 8.9% of the labor force. That’s still above the 2007 low of 8%, but a far cry from the peak of 17.1% in early 2010.

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Most industries added jobs in March, though at a reduced pace from February. But retail employment reported big declines in both February and March, especially in department stores and general-merchandise stores. This could signal the beginning of a shake-up in some traditional retail chains.

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Wage gains for nonsupervisory workers stayed at a 2.3% growth rate in March. Nonsupervisory workers make up four-fifths of the workforce, so their wage gains are more likely to be reflected in prices and consumer spending. We expect wage growth to be closer to 3% by the end of the year.

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Source: Department of Labor, Employment Data