Unemployment Rate Forecast

Economic Forecasts

Job Expansion is the Longest in U.S. History

Kiplinger’s latest forecast on jobs


GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 150,000 per month in ’20 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.2% through ’20, from 2.3% at end '19 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $60 to $65 per barrel in March More »
Housing Total starts up 3.2% in '20 More »
Retail sales Retail and food service sales excluding autos and gas should rise 3.5% in 2020 More »
Trade deficit Widening 6% in ’20 More »

A labor market milestone: the number of employed has risen for 111 consecutive months, a record for the U.S. In December, job gains returned to a more normal 145,000, following a November surge. Most industries saw expansion. Retail surprisingly added a strong 41,000, mostly at clothing and department stores. Unemployment rates for blacks, Hispanics, and those without high school diplomas are also at a record low, reflecting expanding opportunities.

There are some trouble spots, however: Layoffs in machinery and metals manufacturing, likely linked to trade troubles. And retail will likely continue to struggle over the long-term.

Monthly job growth in 2020 is likely to average 150,000, down from 180,000 in 2019 and 223,000 in 2018. Partly, that is because there are fewer available workers to hire, given the low unemployment rate. But the smaller gains also signal that the economy is slowing down to a more moderate growth rate. The tax cut couldn’t boost growth forever, and the trade war with China is keeping exporters and commodities-oriented industries from expanding.

Wage growth dipped. Wage growth for nonsupervisory workers eased to 3% from 3.4% in November. This may indicate increasing cost resistance by businesses that have seen their profit margins erode, despite the scarcity of workers and the low unemployment rate, which stayed at 3.5%, its lowest level in fifty years. The short-term unemployment rate (which tracks folks who have been unemployed for less than six months) is close to its lowest level since the Korean War in 1953.

Reduced wage growth is likely to make the Federal Reserve less concerned about potential future inflation, and thus less likely to raise interest rates in the near term.