The Conference Board uses cookies to improve our website, enhance your experience, and deliver relevant messages and offers about our products. Detailed information on the use of cookies on this site is provided in our cookie policy. For more information on how The Conference Board collects and uses personal data, please visit our privacy policy. By continuing to use this Site or by clicking "OK", you consent to the use of cookies. 
Press Release
Strong employment growth raises the likelihood of yet another Fed policy U-turn
01 February, 2019


Strong employment growth raises the likelihood of yet another Fed policy U-turn

Comment on U.S. Bureau of Labor Statistics Employment Situation Report
Gad Levanon, Chief Economist, North America, The Conference Board

The main message from this report is clear: While financial markets and business confidence measures were moving south in recent months, employers kept adding workers at a fast rate, specifically 304,000 new jobs in January. If anything, employment growth has accelerated in recent months. Due to the government shutdown, some of the data in this month’s job report is hard to interpret, especially government employment and the overall unemployment rate.

Overall economic activity, and especially consumer spending, rapidly expanded during 2018, forcing employers to catch up with the growing demand by expanding their payrolls. The question is how much more catching up do they have left. We still expect job growth to moderate during 2019, but perhaps more gradually than we projected a month ago. With the ongoing massive retirement of baby boomers, employment growth is almost certain to be fast enough to continue tightening the labor market and drawing more people to the labor force. Labor force participation for the working age population has been growing rapidly in recent months, a trend that is likely to continue, limiting the tightening of the labor market moving forward.

Today’s report increases the probability that as wages continue to increase more rapidly, rising inflationary pressure may force the Federal Reserve to make yet another policy shift in its policy around mid-year, and start raising rates again.

For further information contact:

Carol Courter
1 212 339 0232
carol.courter@conference-board.org

Joseph DiBlasi
781.308.7935
Joseph.DiBlasi@conference-board.org

ECONOMIC INDICATORS

Leading Economic Index for:

  • Australia 0.3%
  • Brazil 1.3%
  • China 0.6%
  • Euro Area 0.0%
  • France 0.1%
  • Germany 0.2%
  • Global 0.4%
  • India 0.3%
  • Japan 0.4%
  • Korea 1.2%
  • Mexico 0.1%
  • Spain 0.1%
  • U.K. 0.4%
  • U.S. 0.4%
  • International Labor Comparisons:
  • Visit ILC website
  • Productivity:
  • Visit Total Economy Database™ website
  • Global Economic Outlook:
  • Visit Global Economic Outlook website