U.S. Workers Leave the Couch to Catch Powerful Jobs Wave

TS Illustration/Chip Somodevilla/Getty
While President Donald Trump's economy probably created fewer jobs in February than January's runaway pace, the U.S. labor market continues to strengthen.

It's like a gift from one couch potato to another.

Most economists now say the stimulus from President Donald Trump's $1.5 trillion of tax cuts in late 2017 is starting to fade, and growth is slowing. They say a recession is likely by 2021. They worry that his trade war with China might be hurting confidence among business executives and households. The U.S. government's budget deficit is poised to hit $1 trillion a year, ballooning the already-lofty national debt past $22 trillion.   

But one positive thing economists agree on? Trump, who reportedly watches several hours of TV news a day, fueling his frequent rants on Twitter, has proven remarkably successful at creating jobs for American workers, a linchpin of his campaign platform. Indeed, the labor market is so strong that many previously discouraged people are now able to put down the remote control and find gainful employment.    

"Workers are getting pulled directly from couches into cubicles at a faster clip," Joseph Song, an economist at Bank of America, wrote in a March 1 report. 

A monthly report on February jobs growth due Friday from the U.S. Labor Department is expected to show that nonfarm employers added about 181,000 jobs during the month, down from 304,000 the prior month, based on a survey by the data provider FactSet.

Yet even with the decline, Trump's economy would still be averaging more than 200,000 a month of new jobs since the passage of the tax cuts -- more than enough to add to the total level of employment. 

In fact, the jobs growth was strong enough last month that it probably pushed the U.S. national unemployment rate down to 3.9% from 4%, based on the FactSet survey. Bank of America's Song predicted it might even fall to 3.8%, almost returning to the half-century low of 3.7% reached in November. 

And business executives' scramble to fill posts means they're having to open their wallets to attract new recruits and keep employees from jumping to higher-paying posts.

Average earnings probably jumped by 0.3% in February from $27.6 an hour, according to FactSet, pushing up the year-over-year increase to 3.3%. That would be the fastest annual pace since the U.S. recession that accompanied the 2008 financial crisis.  

For investors, the only bad thing about the strength in the labor market is that it might eventually start to push up inflation: Many businesses often try to pass through their higher labor costs in the form of price increases.

And if price increases accelerate to an annual rate above 2%, from about 1.7% in December, then the Federal Reserve might resume its efforts, sooner rather than later, to raise benchmark U.S. interest rates. Higher borrowing costs can hit companies' earnings per share, in turn putting downward pressure on the stock market.         

"Ongoing tightening of the labor market and rising wage growth could eventually test Fed officials' patience, especially if they begin to spill over to firmer price inflation," economists with the German lender Deutsche Bank wrote in a March 3 report. 

So far, it appears that workers, consumers and the economy are benefiting, with sufficient competition keeping businesses from being able to easily raise prices.  

According to a Federal Reserve report released Wednesday, business executives in most of the central bank's 12 regions report that "labor markets remained tight for all skill levels, including notable worker shortages for positions relating to information technology, manufacturing, trucking, restaurants and construction." 

Employers noted rising wages for both low- and high-skilled positions, and some executives said they were also increasing non-wage benefits such as relocation assistance, vacation time and flexible work arrangements, according to the report. 

Vacation time? Sounds like a good chance to catch up on Netflix or even Fox News.