Most economists were surprised, and pleasantly so, by the Bureau of Labor Statistics’ January job numbers. According to the Bureau as reported by Business Insider, the U.S. Economy added 227,000 jobs during the month, beating expectations by 47,000 jobs. This robust performance continued a record-setting 75 consecutive months of job gains. At the same time, the Bureau reported that wage growth remained contained, gaining only 2.5% year over year, two-tenths of a percent below expectations.
While as the saying goes, “all good things must come to an end,” there is no immediate signal that January’s gains are likely to be the last of their kind. Nonetheless, companies would be well advised to keep an eye on several factors which stand to impact job growth and overall economic health. These include:
Consumer sentiment. According to Business Insider, positive post-election consumer sentiment likely fueled many of January’s gains. Positive sentiments may be placed at risk in the wake of post-inauguration unease; the rocky period for public sentiment following the inauguration could impact consumer confidence and purchasing in the months to come.
Problems in the energy sector. A recent report in Forbes noted geographic disparity in job growth. Hit especially hard are many of the northern plains states – Montana, North Dakota, and Wyoming – which have been adversely impacted by falling oil prices and consequent declines in the region’s fracking-based extraction industry.
International trade turmoil. Previous positive projections for strong economic and employment growth have been based in part on anticipated strength in international trade. That rosy picture is called into question somewhat with the announced U.S. withdrawal from the Trans-Pacific Partnership trade agreement and the threat to renegotiate or withdraw from the NAFTA agreement would stand to drive up prices and diminish markets for US exports.
ACA repeal. Campaign rhetoric notwithstanding, there is no assurance that the Affordable Care Act will be repealed in the near term. Nonetheless, it is likely that the Act’s days are numbered, and economists are forecasting significant employment fallout as a result: Fortune magazine cites over 1 million likely job losses, with other sources citing even larger figures.
On the positive side, companies are likely to benefit from any changes in U.S. employment law. The new administration is already indicating that it will roll back recent expansions of overtime eligibility, and has demonstrated opposition to minimum wage hikes, both of which are likely to please business leaders.
All conjecture aside, one certainty is that US government policy, the US economy and the tone of international relations are both in a state of transition – and that spells uncertainty for business and for the employment picture ahead. While the Bureau of Labor Statistics and the majority of economists currently seem to remain optimistic about 2017’s overall employment and economic prospects, we believe it’s wise to remain flexible and adaptable in light of the number of factors likely to exert an influence. As always, Trion will monitor emerging trends and developments in order to keep our clients informed.