Sunday, December 28, 2014

CNBC and the "Job Surge of 2015" and Demographics

by Bill McBride on 12/28/2014 12:15:00 PM

A few comments on an article that was posted at CNBC on Saturday "2015: The year jobs surge in the US". It was really a video with a few predictions.

First, I think the title was wrong. 2014 was the year jobs surged in the US.

Second, those expecting 300+ thousand jobs per month in 2015 will probably be disappointed.  Too many people compare to the '80s and '90s, without thinking about changing demographics.

The prime working age population (25 to 54 years old) was growing 2.2% per year in the '80s, and 1.3% per year in the '90s.  The prime working age population has actually declined slightly this decade.  Note: The prime working age population is now growing slowly again, and growth will pick up the '10s.  The future is bright!

It was much easier in the '80s and '90s to see a job boom than with the current demographics.

Another reason not to expect a "Job Surge" in 2015, is that usually the best years of an expansion are early (as the Fed reduces interest rates).  "Early" doesn't apply to the current recovery from the Great Recession because the causes of the recession were different (Housing bust, financial crisis, over-leveraged households, Fed at zero bound).

Also, with the unemployment rate down to 5.8%, more companies will have difficulty finding qualified candidates in 2015.

I'll be posting my expectations on employment for 2015 this coming week, but my initial view is that there will be fewer jobs added in 2015 than in 2014 (hopefully close to the same number).

Hopefully the economic word of the year in 2015 will be wages!