US joblessness at historic lows but labour force participation remains stagnant
US non-farm payroll data for December 2019 will be released today, likely confirming initial forecasts of an increase by 165,000 jobs.
The report follows the largest advance in payrolls of 2019 in November, where the US saw an increase of 266,000 jobs largely due to gains in the healthcare, manufacturing and professional and technical services.
As the US Federal Reserve tries to steer clear of a recession in 2020, labor force participation may be the key to maintaining a labor market that’s experiencing a historically low 3.5% unemployment rate. Regardless, despite record low unemployment, the US labor force participation rate has hovered around 63% with little improvement over the last 5 years.
The Fed has signaled that it will not tighten monetary policy in 2020, putting the onus of extending the longest economic expansion in US history on fiscal policymakers. Fed officials have said that the only way to get faster growth is from improved productivity or labor force participation, both jobs for Congress through measures such as job retraining.
If Congress fails to act, the Fed may be forced into further monetary policy measures–such as another rate cut–which could be suggested at the Fed’s next policy-setting meeting on January 28-29.
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