Current state of the Labor Market
Morgan Routt
According to the most recent labor statistics, 6.7% of the work
force was unemployed as of March 2014. The
highest rates of adult unemployment were centered on the nation's 2 largest
minority groups; African Americans were at 12.4% and Hispanics at 7.9%. Unemployment among Caucasians was at 5.8%,
while Asians had the lowest unemployment at 5.4%. The labor force participation rate was at
63.2%, which is slightly up from last month but still down from a year ago. Economists believe the harsh January and
February winter months of this year were responsible for the stagnant start to
the year.
The unemployment rate is reflecting a positive trend overall
with a reduction of .8% since March of last year. This trend is true for all groups except
Asians, who have had a .4% increase in unemployment over the past year. While these rates are at their lowest since
the economic crisis of 2008, the unemployment rate would need to drop another
1% to 1.5% for the central bank to begin raising interest rates. Current low interest rates are designed to
spur borrowing to help businesses grow and hire more workers. These rates have also allowed more affordable
payments on homes and autos. Low rates and
nicer weather have allowed for a 1.1% increase in retail spending in March on
items such as autos, furniture, and clothing.
This trend is expected to continue into April with continued nicer weather
and an improved job market.
Kiplinger projects unemployment will continue to modestly
decline to around 6.3% by the end of 2014.
While good for the economy, this decline will most likely create
inflation heading into 2015. This
inflation, while a concern, would result in higher wages. There will be more spending resulting in
higher retail prices and interest rates on borrowing. As verification of this, the unemployment
rate's gradual decline over the past year has caused an increase in overall
wages by 2.1%. This trend can be
expected to continue into 2015. While
these numbers all appear to be good, they are still well below the pace of
growth achieved during past economic expansions under President Reagan or
President Clinton. Anemic growth in key
foreign markets like China and Europe have also allowed us to remain
competitive globally.
While private sector jobs have shown a slow but steady
increase, federal government positions have fallen by 85,000. Referring to overall job growth and
unemployment rates, the United States has about another 2 years before it can
be considered at normal employment according to Fed Chief Janet Yellen. The Conference Board Consumer Confidence
Index also moderately rebounded in March.
While consumers' assessment of the current job market has remained
unchanged, the number of consumers who believe the job market will grow over
the next few months slightly increased.
Overall for the remainder of 2014, we can expect continued
slow to moderate growth in most employment sectors, a slight increase in
consumer confidence, and a slight increase to interest rates towards the end of
2014 heading into early 2015.
Sources:
The Employment Situation – March 2014. Bureau of Labor
Statistics. (2014, April 4). Retrieved April 17, 2014,
from: http://www.bls.gov/news.release/pdf/empsit.pdf
Payne, D., Somerville, G., Patterson, J., & White, G.
(2014, April 3). Economic Outlook, Indicators, Forecasts - Your
Business-Kiplinger. www.kiplinger.com. Retrieved April 18, 2014, from
http://www.kiplinger.com/tool/business/T019-S000-kiplinger-s-economic-outlooks/
Prial, D. (2014, April 4). U.S. Adds 192,000 March Jobs,
Unemployment Rate Holds at 6.7%. Fox Business. Retrieved April 17, 2014,
from http://www.foxbusiness.com/economy-policy/2014/04/04/us-adds-12000-march-jobs-unemployment-rate-holds-at-67/?Intcmp=jobsreports
Barnes, P., Gasparino, C., & Freeman, J. (2014, April
16). Yellen: 'Normal' employment is two years away. Fox Business.
Retrieved April 17, 2014, from
http://video.foxbusiness.com/v/3475870353001/yellen-normal-employment-is-two-years-away/#sp=show-clips
Courter, C. (2014, March 25). The Conference Board. Consumer
Confidence Index®. Retrieved April 17, 2014, from https://www.conference-board.org/data/consumerconfidence.cfm
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