Don’t expect strong U.S. hiring to keep up in 2018

Here’s the good news. Tens of thousands of Americans are finding jobs every month. The bad news? A long streak of explosive hiring and job growth has to come to an end soon. It won’t happen right away, though. The U.S. likely added almost 200,000 new jobs in November, according to the latest forecast of economists polled by MarketWatch. How good is that? That’s roughly how many jobs the economy had added each month since 2010, a stretch that has resulted in 17.2 million new positions. The long boom in hiring is reflected in the soaring optimism of Americans. With unemployment at a 17-year low, consumer confidence has rocketed to a 17-year high. The brighter outlook is also evident in a surging stock market that keeps setting record highs. Good things can’t go on forever, however. The unemployment rate has fallen so low, at 4.1%, that companies are running out of people to hire even though demand for their goods and services keep rising. Most economists predict hiring will slow to 150,000 a month or less by the end of 2018. The last time job creation was that slow was in the early stages of the current recover that began in mid-2009. Companies have sought to lure workers, including retired baby boomers, with better fringe benefits, but the shortage is expected to get worse. And that could create a cap of sorts on how fast the economy can grow no matter what Washington does to try to help.“When you have such a tight labor market, that is going to crimp the economy,” said senior economist Jennifer Lee at BMO Capital Markets. “If we see fewer jobs created it won’t be because of slower demand. There’s just not enough workers.”The Trump White House and Republican-led Congress aim to keep the good times rolling with a massive reduction in corporate and personal income taxes. The tax bill could pass as early as this week. Supporters insist lower corporate taxes will boost investment, keep American companies from moving overseas and even lure foreign firms to set up shop in the U.S. Even in the best-case scenario, however, there’s no short-term fix for the growing shortage of labor, especially in an economy that requires workers with higher skills. The labor shortage might have one silver lining, though. After years of holding back, companies are investing more in technology and other equipment in an alternative approach that could allow them to boost production at current staffing levels.“No doubt this is already happening,” said Sam Bullard, senior economist at Wells Fargo Advisors. “That is a trend that is going to continue.”Eventually the investment could make the companies more productive, allow them to pay workers more and drive the U.S. economy to greater heights. The last time the U.S. has grown 3% a year was in 2005. But that day is still well into the future.

https://www.marketwatch.com/story/dont-expect-strong-us-hiring-to-keep-up-in-2018-2017-12-02