WASHINGTON (AP) — Healthy consumer and business spending is fueling brisk economic growth, emboldening employers to post record numbers of openings and raising expectations for another positive snapshot of the U.S. job market. Economists have…
WASHINGTON (AP) — Healthy consumer and business spending is fueling brisk economic growth, emboldening employers to post record numbers of openings and raising expectations for another positive snapshot of the U.S. job market.
Economists have forecast that the government will report Friday that employers added a solid 184,000 jobs in September, according to the data provider FactSet, and that the unemployment rate dipped from 3.9 percent to 3.8 percent, matching an 18-year low.
The September gain will extend an 8½-year streak of monthly job growth, coming after the Great Recession had devastated the economy and eliminated nearly 9 million jobs. The employment market has shown no sign of flagging. Over the past six months, the economy has added a strong average of 192,000 jobs each month.
Consumers, business executives and most economists remain optimistic. Measures of consumer confidence are at or near their highest levels in 18 years. And retailers have begun scrambling to hire enough workers for what’s expected to be a robust holiday shopping season. A survey of service-sector firms, including banks, hotels and health care providers, found that they are expanding at their fastest pace in a decade.
Consumers have been spending steadily and appear to be in generally stable financial shape. Americans are saving nearly 7 percent of their incomes — more than twice the savings rate before the recession. That trend suggests that a brighter economic outlook hasn’t caused households to recklessly build up unsustainable debt.
During the April-June quarter, the economy expanded at a 4.2 percent annual rate, the best in four years. Economists have forecast that growth reached a 3 percent to 3.5 percent annual rate in the July-September quarter.
The economy does show some weak spots. Sales of existing homes have fallen over the past year. Increasingly expensive houses, higher mortgage rates and a shortage of properties for sale are slowing purchases.
Auto sales have also slumped. Major automakers reported this week that sales in September were down 7 percent from a year ago.
Other threats loom, too. Borrowing costs for businesses and consumers are rising. Pointing to the economy’s health, the Federal Reserve last week raised the short-term interest rate it controls and predicted that it would continue to tighten credit into 2020 to manage growth and inflation. Over time, higher borrowing costs make auto loans, mortgages and corporate debt more expensive and can eventually slow the economy.
But for now, anticipating stronger growth — and perhaps higher inflation — investors have dumped bonds and forced up their yields. The yield on the government’s 10-year Treasury note, a benchmark for mortgages and other loans, has reached its highest level in seven years.
President Donald Trump’s trade fights could also weigh on the economy, though the effect on hiring won’t likely be felt until next year, economists say. The Trump administration has imposed tariffs on imported steel and aluminum as well as on roughly half of China’s imports to the United Sates. Most U.S. businesses will try to absorb the higher costs themselves, at least for now, economists say, and avoid layoffs.
Still, should the tariffs remain fully in effect a year from now, roughly 300,000 jobs could be lost by then, according to estimates by Mark Zandi, chief economist at Moody’s Analytics.