Sing along with me: “it’s beginning to look a lot like…more jobs in 2014…”
The answer is maybe, but why is this important?
Simply speaking: more jobs = more people with money = more spending on consumer goods = a stronger economy
Recent data reveals that the economy may be poised for improved growth next year. Stock prices and home values are rising, meaning more people are feeling better about their financial situation. People tend to spend more when they’re more confident about their finances. I’ll be looking to see if this translates to an improvement over last year based on how much consumers spend this holiday season.
But what about the outlook for jobs? The economy can only be as strong as the amount of people with income to spend and invest, ultimately supporting the economy.
Lately, the labor market has shown continued signs of improvement, adding 203,000 jobs in November. Although not as robust as the jobs market was back in the 1990s, a continued monthly average of around 200,000 jobs would historically show that the economy is at least on solid-footing.
However, one area of concern I continue to have is the number of people who have jobs vs. the overall size of the population that is of working age (generally those 16 and above). This is referred to as the labor force participation rate.
This number has been falling since 2000 and is now at its lowest point since the late 1970s. While this is partly caused by the jump in the number of retirees over the last several years, it also reflects a large amount of people who, for whatever reason, do not have a job and either cannot find one or don’t want one.
Many think this trend has been caused by a slowing of economic growth over the last decade. In any case, it bears watching as the economy could grow faster if the participation rate reverses course and starts to increase again.
Looking ahead, I do think the strengthening economy should help improve business confidence, which should continue to create job opportunities next year. An average monthly pace at or just above the current rate in 2014 is certainly a possibility and would be a welcoming sign to many. It’s also likely that the unemployment rate will slowly creep below 7% in the upcoming months, edging closer to 6.5% by early 2015.
As the year comes to an end, let’s make a toast to a happy holiday season and the hope for more jobs, and a stronger economy in 2014!