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Welcome to April!
Did you watch the eclipse yesterday? And, if you weren’t in the path of the totality, did you celebrate with one of these bizarre eclipse-themed foods? If these spectacular celestial events have given you a renewed sense of connection to nature – remember it’s Earth Day this coming April 22nd: get out there and enjoy the natural world and plant some plants, if you have the space to do so. If you need some inspiration – check out Kevin and the team at Epic Gardening for fun and practical advice, or find a local Master Gardener volunteer (hint: they often set up a booth at the farmer’s market or offer classes at your locally-owned garden center).
In the meantime, time to shake off the winter chill, embrace the fresh energy of spring, and see what’s blooming in the economy. Let’s get into it.
Cheers, 
Nicole
March continued a 39-month streak of job growth, and what’s more, the US economy now has three million more jobs than predicted before the pandemic upended everything. Some experts have worried that as a quick labor market boom subsides, gains would be relegated to just a few sectors. The opposite appears to be true today, with growth proving more balanced: about 59.4% of industries added jobs last month.
Despite persistently high interest rates, the construction industry added 39,000 jobs, about twice its typical monthly gain, probably at least partly due to the Biden administration’s investment in large-scale projects. Meanwhile, healthcare added 72,000 jobs, government expanded by 71,000 and retail added 18,000. But the most notable story in March is how leisure and hospitality’s gains have been outstripping the rest of the labor market: employers made the most hires on record in entertainment and recreation in February, and the industry has accounted for nearly 1 in 6 new jobs created in the last year.
After some erratic blips in the last few months, the household and establishment surveys are now back in tandem. Economists attributed the divergence to an increase in labor supply through immigration that was not yet captured in the household survey. In fact, immigration is now a front page US economic headline and prominent experts have been weighing in on the impact. “Recent adult immigrants are more likely to be young or prime age (90%) than the native-born adult population (62%) […] They have both higher labor-force participation rates and higher unemployment than the native-born population” noted Goldman Sachs economist Elsie Peng. “Last year, half of the growth in the labor force came from net immigration. There were 5.2 million additional jobs last year, thanks to net immigration. It’s been the key to rebalancing the labor market. It’s a huge part of the reason we’ve got the growth that we’ve got and the disinflation that we’ve had,” concurred Stony Brook University professor Stephanie Kelton.
The Fed Chair himself has highlighted immigration’s role in the economy’s “remarkable” performance last year. “It’s a bigger economy, not a tighter one […] Our economy has been short labor, and probably still is,” however immigration “explains what we’ve been asking ourselves, which is, ‘How can the economy have grown over 3 percent in a year where almost every outside economist was forecasting a recession?’”
In all, most experts seem to be viewing March’s report favorably, perhaps even admiringly:
March continued a 39-month streak of job growth, and what’s more, the US economy now has three million more jobs than predicted before the pandemic upended everything. Some experts have worried that as a quick labor market boom subsides, gains would be relegated to just a few sectors. The opposite appears to be true today, with growth proving more balanced: about 59.4% of industries added jobs last month.
Despite persistently high interest rates, the construction industry added 39,000 jobs, about twice its typical monthly gain, probably at least partly due to the Biden administration’s investment in large-scale projects. Meanwhile, healthcare added 72,000 jobs, government expanded by 71,000 and retail added 18,000. But the most notable story in March is how leisure and hospitality’s gains have been outstripping the rest of the labor market: employers made the most hires on record in entertainment and recreation in February, and the industry has accounted for nearly 1 in 6 new jobs created in the last year.
After some erratic blips in the last few months, the household and establishment surveys are now back in tandem. Economists attributed the divergence to an increase in labor supply through immigration that was not yet captured in the household survey. In fact, immigration is now a front page US economic headline and prominent experts have been weighing in on the impact. “Recent adult immigrants are more likely to be young or prime age (90%) than the native-born adult population (62%) […] They have both higher labor-force participation rates and higher unemployment than the native-born population” noted Goldman Sachs economist Elsie Peng. “Last year, half of the growth in the labor force came from net immigration. There were 5.2 million additional jobs last year, thanks to net immigration. It’s been the key to rebalancing the labor market. It’s a huge part of the reason we’ve got the growth that we’ve got and the disinflation that we’ve had,” concurred Stony Brook University professor Stephanie Kelton.
The Fed Chair himself has highlighted immigration’s role in the economy’s “remarkable” performance last year. “It’s a bigger economy, not a tighter one […] Our economy has been short labor, and probably still is,” however immigration “explains what we’ve been asking ourselves, which is, ‘How can the economy have grown over 3 percent in a year where almost every outside economist was forecasting a recession?’”
In all, most experts seem to be viewing March’s report favorably, perhaps even admiringly:
Consistently, the message from Fed leaders has emphasized patience above all, with a close eye on how the data unfolds. Officials have previously demonstrated a watchfulness on labor demand as a possible precursor to rate cuts – one can imagine that March’s payroll surge may invite questions over the impact on inflation. We should know more soon however, as tomorrow’s US consumer-price data is projected to show a very gradual tapering in underlying inflation. Bloomberg’s economic team suggests we’ll see welcome progress: “We expect the March CPI report to show a modest slowdown in the monthly pace of core inflation to 0.3% — which is still consistent with the Fed’s annual core PCE inflation target of 2.0%. Even if annual headline inflation flutters around 3.0% through year-end, persistent disinflation in the core should allow the Fed to cut rates this summer.”
Nancy Vanden Houten, lead US economist at Oxford Economics, infers that strong job growth is not at all incompatible with rate cuts and the focus should shift towards reliable signs that inflation is abating: “The Fed does not need to see a weak labor market to begin cutting rates but will be guided by readings on wage growth and inflation, which we expect to show more progress toward the central bank’s objectives in the next few months”.
As a group, Fed officials continue to be somewhat of a mixed bag in their predictions of how aggressive rate cuts will be this year. Something new and helpful I learned this month: the central bank publishes a graphic representing their rate projections four times each year. This so-called “dot plot” shares insight into the Fed’s collective expectations on interest rates over time – a useful tool as we look to anticipate rate moves in the next few months. March’s dot plot shows ten officials are currently forecasting three cuts in 2024, while nine anticipate two or less. A new chart to bookmark perhaps, as we continue to peer into the crystal ball in 2024.
The FOMC next meets on April 30-May 1 and are generally expected to stay the course on rates…for now.
“There is no weakness in the job market which would impel the Fed to quickly cut, but no tightness which would prohibit a cut either […] Fed decisions in upcoming meetings will hinge mainly on the inflation data.”
(Sources: Economic Policy Institute, Reuters, AP News, World Bank, The New York Times, The Washington Post, The Wall Street Journal, Bloomberg, CNBC, The Brookings Institution, ZipRecruiter, Indeed Hiring Lab, Market Watch, Britannica Money, Morningstar)
What Else for March?
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(Sources: Economic Policy Institute, Headspace, Mercer, Deloitte, Harvard Business Review, Qualtrics, ZipRecruiter, Edelman, The New York Times)
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