Authored by Gordon Gray, AAF’s
Director of Fiscal Policy
Over the foreseeable future, and barring any other surprises, the U.S. economic
and financial market outlook will be dominated by the coronavirus and the
presidential election. From now until November, the media will breathlessly
cover half-baked plans for tax changes, infrastructure, and a host of other
issues from the major candidates (including Trump) that will bear little
resemblance to any future change in law. That discussion, happily, should not
animate the strength of the labor market, though it will move financial
markets. The coronavirus on the other hand could substantially affect the U.S.
economy, and indeed already has,
but it is unlikely to have significantly moved today’s jobs numbers.
Instead, the February employment situation should be a snapshot of the U.S.
economy, a resilient, modestly growing market economy despite flagging global
growth. Even before taking the effects of the coronavirus into account, Q1
gross domestic product (GDP) was expected to fall off of last quarter’s 2.1
percent growth due in part to a halting of Boeing’s production of the 737 MAX.
While Boeing itself does not appear to have laid off workers, the production
halt will have employment consequences for Boeing’s suppliers. Somewhat more
seasonal weather could also pull back some of the pop seen in the January jobs
report.
What are the vital signs showing in advance of this morning’s numbers? Both the
ISM manufacturing and non-manufacturing indices, among the few indicators for
February’s jobs market available, suggest employment growth in these sectors.
Disruptions to manufacturing supply chains do not yet appear to have shown up
in the jobs data. The ADP and UI claims data point to more enduring strength in
the labor market.
For February, this guesstimator expects payroll gains of 155,000 in February,
unemployment to have ticked down to 3.5 percent, and average hourly
earnings to pick up 6 cents, for a 3.04 percent yearly gain.
No comments:
Post a Comment