The Jobs Machine Rolls
After a deep recession in which we lost approximately eight million jobs, America’s economy has been quite consistent with regard to the creation of jobs during the past several years. For example, during the period of 2013 to 2017, just over 10 million jobs were created. That comes to just over 200,000 jobs per month. Though the numbers are still preliminary, the December jobs report indicates that we have added 2.1 million jobs in 2017, which is slightly below, but very close to what we have created in the past four years.
This is why our country’s unemployment rate has fallen from 10% to December’s reading of 4.1%, a number most economists consider close to full employment. This is quite a dramatic drop, and the next question is — where do we go from here? Does full employment mean that we can’t improve? There are two numbers which indicate that there is still room for improvement. The labor participation rate of 62.7% is close to long-term lows and attracting the long-term unemployed back into the economy is still an important goal.
We can also improve upon the types of jobs created. Wage growth of only 2.5% over the past year tells us that we are not creating enough high-paying jobs. Thus, we have come a very long-way. The economy is in much better shape than it was during our recession of a decade ago. But there is still room to add more jobs and better paying jobs — without the economy being beset by inflation. Inflation is a concern because with inflation comes higher interest rates and low rates have buoyed our recovery.
The Weekly Market Update
Rates fell back in the past week. For the week ending January 4, Freddie Mac announced that 30-year fixed rates decreased to 3.95% from 3.99% the week before. The average for 15-year loans decreased to 3.38% and the average for five-year adjustables fell to 3.45%. A year ago, 30-year fixed rates averaged 4.20%, approximately 0.25% higher than today.
Attributed to Sean Becketti, chief economist, Freddie Mac -- "Treasury yields fell from a week ago, helping to drive rates on home loans down to start the year. Rates on 30-year fixed-rate loans fell 4 basis points from a week ago to 3.95% in the year's first survey. Despite increases in short-term interest rates, long-term interest rates remain subdued. The 30-year rate is down a quarter of a percentage point from where it was a year ago and the spread between the 30-year fixed and 5/1 adjustable rate loans is the lowest since 2009. With the FOMC minutes showing continued support for gradual increases in rates and inflation rates remaining low, there isn't much upward pressure on long-term rates at the moment. Whether that changes due to a tighter labor market and the economic impact of tax reform remains to be seen."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.