A Job Market That Keeps Fluctuating

Jobs keep coming and going.

The economy seems to be having difficulty finding a consistent perch lately. It’s not necessarily bad; there’s been lots of new job additions in the last couple of years. Rather, the problem is that the growth is a bit unstable, not to mention unpredictable.

Back in June of 2019, the job market was projected to create at least 140,000 new jobs according to ADP. What we ended up getting in the end was approximately 102,000 new jobs. Now, 102,000 new jobs is certainly not nothing, but when your projections fall short by 38,000, it has to raise a few eyebrows.

Credit: Bloomberg News/Landov

According to economists at the time, larger businesses and corporations were adding lots of new jobs, somewhere to the tune of 65,000. The drop-off came from smaller businesses, which lost 23,000 jobs. To show some more specific numbers, education and health picked up 55,000 jobs, the professional and business sectors gained 32,000, and construction services lost 18,000.

So what happened? Well, there were two main problems. The first was trade uncertainty. The trade disputes between China and the US were making businesses more cautious of how they conducted themselves, which meant hampered growth. The second problem was fizzling tax cuts. While the tax cuts that were made in 2018 boosted things for awhile, they began to fizzle out by late 2019.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, explained it thus: “The bigger picture here is that payroll growth had to slow this year because the economy is no longer being boosted by last year’s tax cuts. But the key private sector survey measures of hiring, notably the ISM surveys and the NFIB survey, have substantially recovered.”

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6 months ago
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