2017 Could Prove Interesting Macroeconomic Year
Guest blog by Dr. Tom Cunningham, Economist and MST Advisor
The last employment report for 2016 came in showing decent growth, but below expectations. 156,000 net jobs were created, more than enough to keep pace with labor force growth, but below the 175,000 expected. The unemployment rate (U3) ticked up to 4.7 percent. The broader measure of labor underutilization (U6), which includes workers not currently employed or on unemployment rolls but wanting work, ticked down to 9.2 percent. Labor force participation, at 62.7 percent, is unchanged over the year.
Neither the figures nor the details reveal anything dramatic in terms of movement. Healthcare, hospitality, social assistance and transport all saw some job gain. Other sectors were either up slightly or flat. No sector lost net employment, a little surprising for the manufacturing sector, which expected a small loss but instead registered a small gain. December is also when revisions to seasonal adjustments are made, and those revisions turned out to be quite minor.
So the year closes with the economy looking rather solid. We began with a low headline unemployment rate, and it fell somewhat from there. We added a little more than two million net jobs, which slightly exceeded expansion in the labor force. Rhetoric aside, the new administration is inheriting a solid overall labor market.
Looking ahead, 2017 is filled with uncertainties. Healthcare, currently about one-seventh of the U.S. economy, is clearly in for some turbulence. Sectors that are currently hot are having trouble attracting appropriate workers – and that applies to more than just high skill positions. For example, drivers are in short supply.
The international sector is particularly mystifying. Overwhelmingly, firms that export also import. That is, our exporters do not only sell abroad things comprised entirely of U.S. goods. Most exports include a high level of imported raw or intermediate goods. As such, trade disruptions can complicate matters and create problems.
All in all it could be an interesting year for macroeconomists everywhere.
About the Author
Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development of the MST Virtual Economist and is the MST Advisory economics specialist. Tom will be a featured speaker at the 2017 National ALLL Conference in May.
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