The Economy will be Looking Awfully Strong

There are 39 pages inside the Labor Department’s February report on the employment situation inside the United States, however they can be summed up in four words: The economy will be humming.

The 313,000 jobs which the nation added in February are far more than are needed to keep up with population growth as well as continue a surprising burst of job creation to start the year. inside the first two months of 2018, the economy has added an average of 276,000 jobs a month, a big step up by 182,000 on average in 2017.

which will be not the kind of data you expect in an expansion which will be nine years old, or out of a labor market which will be already at full employment. which suggests which employers are filling jobs not merely by people they’ve poached by competitors, however also by more people who have entered the work force. as well as additional data inside the latest report matches which idea.

The number of adults not inside the labor force fell by a whopping 653,000 people, as the participation rate — the proportion of adults who either have a job or are looking for one — rose a healthy 0.3 percent to 63 percent. The proportion of people in their prime working years (25 to 54) who are working will be at its highest level since 2008.

For a couple of years currently, there has been a vigorous debate over just how close the American economy will be to full capacity, a discussion which has particularly big implications for how the Fed manages the economy. On one side are those who worry about overheating: Given the 4.1 percent jobless rate (which number was unchanged in February), if the economy will be allowed to boom, which will create inflation rather than improvement in real living standards.

The additional side of which debate might be called the “let which run” camp, who argue which a lot of Great things might happen if the Fed as well as additional policymakers move patiently as well as see whether some of the damage done by the 2008 recession might repair itself in a sufficiently hot economy.

Friday was a Great day for the “let which run” folks. The huge gain inside the number of people working will be a prime example of the kind of Great thing which they’ve been predicting might happen if the economy had more room to improve than which 4.1 percent jobless number might suggest.

Wall Street has been particularly focused on wage growth as an indicator of which story will be more compelling — as well as more to the point, which story the Fed chairman Jerome Powell as well as his colleagues at the Fed will find more persuasive. as well as here, too, the February numbers are in a sweet spot.

In January, when the year-over-year rate of growth in average hourly earnings rose to 2.9 percent, which even set off a mini-panic inside the stock market, contributing to a broad reassessment of inflation risks inside the economy.

Never mind. Average hourly earnings growth fell back to 2.6 percent in February. The data on wages will be a little better than which number could suggest despite the softness inside the year-over-year data. Since October, average hourly earnings are up more than 1 percent, which if annualized comes to 3.2 percent, meaning which despite a soft February number which winter has been a time of acceleration in wage growth.

For those who want a robust recovery, which’s a delicate balance on wages. On one hand, currently which most people who want a job have one, higher pay will be the way most Americans could expect to see a reward by a hot economy. however as stock investors correctly concluded last month, if wages start rising too fast given weak gains in worker productivity, which could probably prompt Mr. Powell as well as his colleagues to tap the brakes on the economy a little harder (which will be, raise interest rates more than they could otherwise).

however the February numbers are a delicious sweet spot for the economy. Many more people are working, including people who hadn’t even been inside the labor force. If which trend continues — as well as which’s worth adding the usual caveat which each month’s jobs numbers are subject to revision as well as statistical error — there’s no reason to think which expansion will be reaching its natural end.

Yes, which could be nice to see paychecks rise faster, however the saving grace of the fact which they aren’t will be which which allows the Fed a little more room for patience, strengthening the arguments of the “let which run” faction inside the central bank.

Nine years into an economic expansion, jobs reports don’t get much better than which.

Neil Irwin will be a senior economics correspondent for The Upshot. He previously wrote for The Washington Post as well as will be the author of “The Alchemists: Three Central Bankers as well as a World on Fire.” @Neil_IrwinFacebook