U.S. Economic Forecast: A Hotter Job Market
The U.S. economy is heating up. And it will likely get even better, especially on the jobs front, which could make hiring and retaining top talent a challenge.
The latest data shows that the economy is expanding and adding enough jobs to bring down unemployment to its lowest level in years. GDP grew at a healthy 3.1% annualized rate in the second quarter, up substantially from 1.2% in the prior period. And in October, the unemployment rate hit 4.1%. That’s the best reading since December of 2000. And there’s reason to believe more growth is on the way.
Indicators of an expanding economy can translate to growth for enterprising brokers and consultants. Many employers find themselves in a war for top talent, making hiring and employee retention priority objectives. And as companies look to increase investment in their businesses, brokers have a fresh opportunity to demonstrate the critical role strategic benefit solutions can play. Here are a few key indicators.
More Job Vacancies
The U.S. is seeing a growing number of job vacancies. In September, the total number of job openings was 6.1 million, up from 5.7 million in September of 2016. Companies don’t usually advertise jobs unless they intend to fill them, so it’s likely that workforces will grow, and employees will seek out new roles and competitive offers from different employers.
Given the demand for labor is up, it’s not too surprising that wages are also rising as employers compete to hire. Wages were up 2.9% in September versus a year earlier. This is another indicator of falling unemployment and shows how companies are competing for talent by raising salary levels.
Small Business Outlook Improving
Small businesses are traditionally an engine for job growth in the U.S., and high optimism among small business owners usually results in more hiring. The current outlook among small business owners has reached a historically high level. “Small business owners are more optimistic on their outlook of the U.S. economy this quarter (41%) compared to last quarter (33%),” according to the most recent MetLife & U.S. Chamber of Commerce Small Business Index report.
A steady increase in spending on capital goods by businesses in August and September is also a good sign. In the simplest terms, capital goods are machines used to make goods. Typically, when more machines are purchased, more workers are then hired to operate them.
Confident Federal Reserve
The country’s central bank, the Federal Reserve, now says the economy is probably strong enough for it to raise interest rates, or in other words, an increase in the cost of borrowing money. The Fed is required by Congress to pursue policies that will “promote effectively” the two goals of maintaining full employment and keeping the price level stable. Policy makers would not suggest raising interest rates again this year if doing so would stall job creation.
Of course, the future is uncertain. But these economic indicators have a long record of signaling a stronger economy and an improved jobs market, especially given their current readings. A hotter job market will make hiring and retaining workers more challenging for businesses. This can lead to expanded client relationships for savvy brokers. Helping employers understand and appreciate the importance of the right mix of employee benefits, including voluntary benefit options and employer-provided retirement plans, can help attract and retain the best talent.