Job gains suggest a slowdown in the US economy but a loss of speed

WASHINGTON (AP) – A month ago, many economists have regretted that the 10 years of expansion in the United States do not seem stable. But after the government reported Friday that recruitments rebounded in March, the economy has suddenly picked up steam.

Since last year, growth has weakened to move closer to the modest pace that has prevailed for almost all of the expansion, which has lasted for almost ten years. The shock caused by the 2017 Trump government tax cuts and the government 's spending increase last year has faded. And the global economy has shifted from an engine of the US economy to a headwind.

However, the strong job gains of 196,000 recorded last month could also help dispel lingering fears of a recession that could occur over the next year or so. The slow but steady pace of economic growth is expected to keep inflation low and possibly support the expansion, which is expected to be the longest ever recorded in July.

By historical measures, the expansion has not matched the sometimes explosive growth experienced by the private sector and businesses but has often resulted in financial bubbles or economic excesses – and possibly a recession.

"Sorry means you're not overheating," said Josh Wright, chief economist at iCIMS Software Builder, about the current expansion. "It is more stable and we will have fewer imbalances and it looks like we will be able to extend this recovery even further."

In its monthly employment report on Friday, the government also said the unemployment rate remained close to 3.8 percent in March, its lowest level in five decades.

So far this year, employment growth has averaged 180,000 per month. This is however down from the monthly average of 223,000 last year. And it is the lowest average gain over three months since November 2017, before the entry into force of tax cuts.

Wage growth also fell slightly in March, as the average hourly wage increased 3.2% over the previous year. This is down from the 3.4% gain recorded in February over the previous year, the best of all ten years.

"Current data paints a picture of resilient US demand, which has moved to a more moderate pace of growth after last year's strong gains," said Jonathan Millar, senior economist at Barclays.

Investors used Friday's job data. The stock market rose slightly in the afternoon, prolonging the rally that rallied the financial markets this year.

Given that hiring and wage growth are not growing fast enough to threaten high inflation, the Federal Reserve is expected to remain on the sidelines indefinitely, giving up rising interest rates, estimated economists.

Not later than in December, Fed officials had planned to increase rates twice this year. However, in March, after the volatility of financial markets, inflation showed signs of slowing and growing concern about the global economy. The Fed said it would probably keep its rates unchanged in 2019.

Yet job data also provides little reason for the Fed to cut rates, badysts said, despite repeated calls by President Donald Trump to the Fed. On Friday, Trump went further, calling on the Fed to renew the bond buying program used to reduce long-term borrowing rates early in the decade following the Great Recession. The program called "quantitative easing".

"Our country is doing incredibly well economically," Trump said. But Fed decision makers "have really slowed us down," and if they lower rates and resume buying bonds, "you'll see a rocket".

Quantitative easing was an emergency tool that the Fed, under the presidency of Ben Bernanke, had used to buy trillions of dollars in government bonds and other securities. The third and final cycle was launched in 2012, while the unemployment rate was still 8%.

The Fed's policy has probably contributed to another gap in current expansion: it has benefited the wealthiest Americans more than the others. Indeed, the Fed's quantitative easing program, by keeping rates on Treasury securities, has led many investors to invest more in equities, thereby increasing their value.

The stock market has tripled from its trough ten years ago, to the tenth of the richest Americans, which holds about 80% of the value of US stocks. The net worth of the house, a source of wealth much more vital for the middle clbad, has much less recovered.

And many households remain plagued by financial insecurity despite the steady pace of recruitment. Forty percent of workers earn less than $ 16 an hour, according to government data badyzed by the Institute of Economic Policy. In March, hiring resumed in the highest-paying sectors, such as professional and business services, which created 37,000 jobs in the engineering, computer services, accounting and technology sectors. 39 other areas.

Manufacturers are not performing as well, cutting 6,000 jobs, the first decline in the industry in a year and a half, mainly because of General Motors' layoffs. Construction companies have created 16,000 jobs.

One factor that could weigh on hiring in the coming months is the decline in the supply of workers in the healthiest labor markets. Charles Dunlap, owner of an accounting firm in Houston with a partner, had a much harder time finding a new bookkeeper than he had done during his last post, at the end of 2016.

At the time, advertising mainly through word of mouth resulted in unsolicited interview requests and higher degree applicants. Dunlap interviewed only three potential people this year, although it increased the starting salary of the job from about $ 2 an hour to about $ 15.

"It's the big challenge these days, finding staff," Dunlap said.

Like hiring, growth should also slow this year to about 2.25%, down from 2.9% in 2018, the fastest growth of the last three years. In the much faster growth of the 1990s, growth has exceeded 4% for four years.

Consumers contributed to slowing growth, as retail sales fell in February and a broader measure of consumer spending fell in January. Companies have also reduced their spending on industrial machinery and other equipment, as well as in factories and other buildings.

And in Europe and Asia, weaker economies have reduced demand for US exports. According to a private survey, Europe is on the verge of recession, with a contraction of its plants in March at the fastest pace of the last six years.

Nevertheless, most badysts expect the US economy to survive weakness abroad.

"The United States is much more isolated from these factors than other countries," said Millar. "We have a relatively closed economy."

Corporate profits also seem to rebound after stagnating in the first three months of this year.

Analysts expect the S & P 500 companies to record a decline of nearly 4% in earnings per share in the first quarter of the previous year, compared to FactSet. This would be the first decline in almost three years.

But Steve Chiavarone, a stock strategist at Federated Investors, pointed to encouraging reports on the Chinese economy and manufacturing in the United States, as well as global central banks easing interest rates.

"In the past few days, you've seen the earnings estimates for 2019 and 2020 increase for the first time since September," said Chiavarone.

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Business editor Stan Choe contributed to this report from New York.