Econ Corner Title Graphics - September 2024

U.S. employment is expected to increase by 123,000 jobs in September

KEY TAKEAWAY: Employment in the U.S. is expected to increase in September 2024 by 123,000 jobs while the unemployment rate is expected to rise to 4.3%. 
LABOR MARKET OVERVIEW (1)-1
Employment Forecast - August 2024-1
Unemployment Forecast - August 2024-1

Employment 

  • Our Expectations: Over the past five months, ending in August, there was an average of 134,600 jobs added to the labor market, compared to an average of 254,000 in the months prior.  Last month, the Federal Reserve announced the first interest rate cut since the start of its campaign to combat inflation in early 2022, lowering the rate by half a percentage point.  This indicates a shift in focus by the Fed and other public officials towards prioritizing employment. 

  • Diving in: In contrast to the weak job numbers, August’s other payroll results were not as flat. As a result of the recent Consumer Price Index (CPI) values, wages increased roughly 2.6% on an annual basis.  Weekly hours rose at the same rate.

 

Unemployment Outlook 

  • Here's the Scoop: The U-6 unemployment rate, which includes discouraged, underemployed, and unemployed workers in the country, edged up to 7.9% in August. The U-3 unemployment rate, which indicates only the number of unemployed people actively seeking a job, decreased to 4.2%.

  • What Does This Mean?: The mixed outcomes in the U-3 and U-6 unemployment rates signal that more people are avoiding unemployment by working part-time jobs. This is a bad outcome when it is accompanied by weak job growth, as it indicates that these part-time jobs are being filled by those previously employed full-time rather than those who were completely unemployed.

Key Indicators 

  • What We're Watching: The factors determining the predicted job creation and unemployment rate are below. They include the number of monthly job openings, average job salaries, job searchers, and the number of unemployment claims applications. This data from Geographic Solutions (GSI) during the September survey period shows the following:

September 2024 Econ Corner Key Indicator Graphic

Analyzing these figures helps to paint a clearer picture of what to expect from the upcoming labor market report. Based on the numbers we can expect to see a labor market in July keeping pace with previous months this year. 

 

Employment & Unemployment Forecast

Will the US labor market continue to grow in the coming months? If so, what’s causing this recent growth?

Yes. Although job growth will be slow, recent employment gains coupled with an uptick in labor force participation rate seem to be enough to maintain positive forward momentum.  

 

How will the surging labor market impact the Federal Reserve’s decision to cut interest rates?

The large job growth seen over the last year gives the Federal Reserve room to maintain or raise rates without pushing the economy into a recession.

Despite the recent growth of jobs, why is the labor market still tight?

The labor market may give the appearance of being tight to some, but here's why it's not.  Typically a tight labor market means that the unemployment rate maintains a low rate after a period of decline, job growth slows, and wage growth picks up. Recent growth in jobs contradicts that we're in a tight labor market.

Geographic Solutions derives its employment forecast and unemployment rate forecast from internal data on the number of job openings, searchers, and employment and unemployment applications filed on Geographic Solutions' state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).

Meet the Economist_Econ Corner (5)
5

Are you enjoying Phillip Sprehe’s insights and analysis? Interested in having him speak or provide content for podcast, television, internet, or other mediums? Please email us using this form.