The unemployment rate fell to 3.7 percent in September, its lowest level since 1969, the Labor Department reported Friday. President Trump quickly celebrated the news on Twitter, and many forecasters predict the jobless rate will decline even more in the months to come.
“We saw some evidence of hurricane impact in employment growth,” economists Joseph Song and Michelle Meyer of Bank of America Merrill Lynch wrote in a note to clients. “Leisure and hospitality was down 17,000, which is a big shift from the trend of approximately 20,000 gains per month. Moreover, retail trade was down 20,000 which could be partly weather related as consumers and businesses hunkered down for the storm.”
Economists continue to be surprised that wages are not growing faster now that competition for workers is so fierce. Annual pay for the average worker increased only 2.8 percent in the past year.
The Dow Jones industrial average fell sharply after the jobs report came out, but experts view the dip in September hiring as a temporary blip. Federal Reserve Chair Jerome H. Powell said the U.S. economy is in an “extraordinary” period this week. Many other data points remain strong. Unemployment claims fell to a 49-year low last week, while July hiring was revised up from 147,000 to 165,000 and August’s from 201,000 to 270,000, further indication that businesses continue to add workers at a rapid pace.
Unemployment has declined steadily since the Great Recession, when it skyrocketed to 10 percent in October 2009. Many economists see today’s low rate as a continuation of the trend that began under President Barack Obama, although they think the GOP tax cuts played a role in keeping job gains strong this late in an economic expansion.
“We’ve been dancing around hitting this unemployment record for several months. It was inevitable,” said Andrew Chamberlain, chief economist at Glassdoor. “You pass a $1.5 trillion tax cut when the economy is close to full employment and it works pretty well.”
Trump tweeted: “Just out: 3.7 percent unemployment is the lowest number since 1969!” He posted the tweet at 6:06 a.m., which goes against a federal regulation that the president and members of the executive branch are not supposed to speak publicly about the jobs report until an hour after its 8:30 am release, but Trump has violated the rule before.
The nation saw a sharp drop in new hires last year after Hurricanes Harvey and Irma, almost snapping the record-setting streak of years of continuous job growth. But the economy quickly bounced back, and areas hit by storms were soon drawing lots of construction workers to aid in rebuilding.
While unemployment remains low, wages grew only 2.8 percent in September, a slight disappointment after 2.9 percent growth in August, which was the highest in nine years.
Many major employers announced pay increases in recent months, but those have yet to significantly move the needle nationally. Average hourly earnings haven’t topped 3 percent growth yet in this expansion.
Amazon, the second-largest employer in the United States, announced it was increasing its starting pay to $15 an hour in November for full-time and temporary employees, another sign wages might move up in the coming months. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post).
Powell said more wage growth is “quite welcome” and the Fed isn’t worried yet about higher pay causing inflation. In fact, the wage gains most Americans are seeing are getting entirely wiped out by rising gas, rent and other prices.
“Workers simply aren’t getting ahead,” Ryan Nunn and Jay Shambaugh of the Brookings Institution, a think tank, said in a report out this week. “Real wage growth has been consistently hovering around zero.”
There are also concerns that while there is a lot of excitement about 3.7 percent unemployment, some other measures of the health of the labor market have still not returned to their pre-recession levels.
“The 3.7 percent unemployment is definitely exciting, but it’s not the full story,” said Martha Gimbel, research director at Indeed.com’s Hiring Lab. “Part of what we all care about is not just the low unemployment rate, but that people are employed in good jobs and that they can get the hours they want.”
Gimbel pointed out that the number of workers employed part-time who want a full-time job actually rose in September. There are 4.6 million Americans who are involuntary part-time workers, compared with 3.9 million in 2006 and less than 3.2 million in 2000.
“We are almost there, but I do think there’s still room for improvement,” Gimbel said.