In September, US unemployment fell to its lowest level for nearly half a century. This together with strong GDP growth and consumer confidence promise an excellent 2018 for the US economy.
Figures for US unemployment released in September showed that the national rate dropped to 3.7%. This is the lowest jobless rate since 1949 and a significant drop from the 10% registered at the height of the recession in October 2009.
Steady rate of job creation
The US has been creating jobs at a steady monthly rate for eight and a half years. Job creation over the last quarter this year has been particularly impressive. July posted 165,000 new jobs while August saw a massive of 270,000. The rate fell slightly in September when the country was hit by Hurricane Florence.
US unemployment is expected to stay low for the rest of this year and into 2019. Predictions from the Fed, quoted in the Financial Times, point to a steady 3.7% for the remainder of 2018 with a further drop to 3.5% next year.
“The job market is red hot,” said James Knightley from ING for the Financial Times. Other analysts stated that the US has still not reached full employment since population growth is still strong and wage increases remain low.
Unemployment in Florida has been even lower than the national rate so far this year. The Sunshine State posted a figure of 3.7% in August and several counties are creating jobs at a far higher rate than the US in general. This is the case in Orlando, Tampa and Jacksonville where population growth outpaces the national rate too.
The US economy has enjoyed a particularly strong year. GDP growth came in at 4.2% in Q2, the best for four years. Market analysts are forecasting between 3% and 3.5% for Q3. This figure would take total GDP growth this year in the region of 3%.
Jay Powell, the Fed Chairman, said he was “very happy with the remarkably positive US economy”. He went on to predict that the current rate of growth could “continue for quite some time”.
High spending and saving
On the back of the strong economic performance, consumer confidence soared. In September, it reached its highest level for 18 years with American spending predicted to reach a peak over the forthcoming holiday period.
As well as spending, Americans are also able to save thanks to the buoyant economic situation. Latest figures point to households saving on average almost 7% of their income, over twice the amount they were able to put by before the recession.
(Sources: Washing Post, Financial Times)