RSS Feed by Calculated Risk on 1/02/2019 12:51:00 PM
Wednesday, January 02, 2019
Question #3 for 2019: Will job creation in 2019 be as strong as in 2018?
Earlier I posted some questions for this year: Ten Economic Questions for 2019. I'm adding some thoughts, and maybe some predictions for each question.
3) Employment: Through November 2018, the economy has added 2,268,000 thousand jobs, or 206 thousand per month. This was the best year since 2015. Job creation was up from 182 thousand per month in 2017, and up from 195 thousand per month in 2016. Will job creation in 2019 be as strong as in 2018? Will job creation pick up further? Or will job creation slow in 2019?
For review, here is a table of the annual change in total nonfarm, private and public sector payrolls jobs since 1997. For total and private employment gains, 2014 and 2015 were the best years since the '90s, and it appears job growth peaked for this cycle in 2014.
| Change in Payroll Jobs per Year (000s) | |||
|---|---|---|---|
| Total, Nonfarm | Private | Public | |
| 1997 | 3,411 | 3,216 | 195 |
| 1998 | 3,049 | 2,736 | 313 |
| 1999 | 3,181 | 2,720 | 461 |
| 2000 | 1,938 | 1,674 | 264 |
| 2001 | -1,726 | -2,277 | 551 |
| 2002 | -511 | -744 | 233 |
| 2003 | 120 | 162 | -42 |
| 2004 | 2,041 | 1,894 | 147 |
| 2005 | 2,517 | 2,331 | 186 |
| 2006 | 2,095 | 1,886 | 209 |
| 2007 | 1,148 | 860 | 288 |
| 2008 | -3,569 | -3,749 | 180 |
| 2009 | -5,061 | -4,987 | -74 |
| 2010 | 1,053 | 1,269 | -216 |
| 2011 | 2,090 | 2,402 | -312 |
| 2012 | 2,151 | 2,218 | -67 |
| 2013 | 2,301 | 2,368 | -67 |
| 2014 | 3,005 | 2,876 | 129 |
| 2015 | 2,712 | 2,561 | 151 |
| 2016 | 2,344 | 2,138 | 206 |
| 2017 | 2,188 | 2,163 | 25 |
| 20181 | 2,443 | 2,395 | 48 |
| 12018 is Year-over-year job gains through November | |||
The good news is job market still has solid momentum heading into 2019.
The bad news - for job growth - is that a combination of a slowing economy, demographics and a labor market nearing full employment suggests fewer jobs will be added in 2019.
In 2018, employment was boosted by some fiscal stimulus, higher energy prices (helped in some areas), and supply was boosted by Puerto Ricans moving to the mainland following hurricane Maria.
In 2019, the fiscal stimulus will fade, lower energy prices will hurt some areas, and the supply boost from Puerto Rico is probably over.
Note: Too many people compare to the '80s and '90s, without thinking about changing demographics. The prime working age population (25 to 54 years old) was growing 2.2% per year in the '80s, and 1.3% per year in the '90s. The prime working age population has actually declined slightly this decade. Note: The prime working age population is now growing slowly again, and growth will pick up the 2020s.
The second table shows the change in construction and manufacturing payrolls starting in 2006.
| Construction Jobs (000s) | Manufacturing (000s) | |
|---|---|---|
| 2006 | 152 | -178 |
| 2007 | -195 | -269 |
| 2008 | -789 | -896 |
| 2009 | -1047 | -1375 |
| 2010 | -187 | 120 |
| 2011 | 144 | 207 |
| 2012 | 113 | 158 |
| 2013 | 208 | 123 |
| 2014 | 363 | 208 |
| 2015 | 337 | 69 |
| 2016 | 190 | -9 |
| 2017 | 250 | 207 |
| 20181 | 282 | 288 |
| 12018 is Year-over-year job gains through November | ||
Energy related construction and manufacturing hiring was solid in 2017 and 2018 as oil prices increased. However, in 2019, energy related employment will probably decline since oil price have fallen sharply recently. Also, for manufacturing, there will probably be little or no growth in the auto sector in 2019.
So my forecast is for gains of around 133,000 to 167,000 payroll jobs per month in 2019 (about 1.6 million to 2.0 million year-over-year) . This would be the fewest job gains since 2010, but another solid year for employment gains given current demographics.
Here are the Ten Economic Questions for 2019 and a few predictions:
• Question #1 for 2019: Will Mr. Trump negatively impact the economy in 2019?
• Question #2 for 2019: How much will the economy grow in 2019?
• Question #3 for 2019: Will job creation in 2019 be as strong as in 2018?
• Question #3 for 2019: Will job creation in 2019 be as strong as in 2018?
• Question #4 for 2019: What will the unemployment rate be in December 2019?
• Question #5 for 2019: Will the core inflation rate rise in 2019? Will too much inflation be a concern in 2019?
• Question #6 for 2019: Will the Fed raise rates in 2019, and if so, by how much?
• Question #7 for 2019: How much will wages increase in 2019?
• Question #8 for 2019: How much will Residential Investment increase?
• Question #9 for 2019: What will happen with house prices in 2019?
• Question #10 for 2019: Will housing inventory increase or decrease in 2019?
