The U.S. jobs report for April was relatively weak. Only 160,000 jobs were added, well below expectations of 200,000-250,000. The “feel good” range for a trend is 200,000-300,000 new jobs each month. However, no one month tells a full story and no one data point should be viewed in isolation. If we see weak numbers in May and June then we can start to worry. Opinions about the Fed changing position on rates is also premature. The attached article makes some good points about looking at the current data, looking at recent trends, and properly interpreting what it means.
What this means for Arizona is also different in the shorter term. Our state was hit hard by the downturn and needs to post strong rates of growth to get back to where we were. Even if the problems in housing persist through the remainder of the decade, we will still see improvement in the local economy and will continue to outpace the nation. We are already top five in population growth (RCG estimate for 2016) and will soon be top five in job growth.
On the other hand, we do need to pay attention to the national numbers. There is no single risk to the economy that will send the U.S. into a downturn. It will be more like slowly filling a bucket with smaller risks. Eventually the bucket will get too heavy. When the U.S. economy sinks, it will grab on and try to pull down individual states. Hopefully, we will be more resilient this time around, like Arizona has been every recession period prior to the Great Recession of 2008.
Our conclusions from this most recent economic report: 1) Look to May and June U.S. employment numbers to see if a weaker trend is really developing, 2) pay attention to other factors like wage growth and the quality of the jobs being created, 3) the Fed won’t be changing direction based on one report, the previous stories are still in play, and 4) we need to keep working on building the local economy.
The Governor, Legislature, mayors, county boards, economic development and planning organizations, etc. need to be vigilant.