Skip to main content

Jobs Rebound Eases Fears of Recession

While cautious, consumers are confident the economy will continue to expand in the near term
“I look at new cars on the highways and cranes on the skyline as indicators of consumer and business confidence.”  — Eifrion Evans, CEO Lumishore

“I look at new cars on the highways and cranes on the skyline as indicators of consumer and business confidence.” — Eifrion Evans, CEO Lumishore

An important measure of consumer confidence slipped in March, but employers showed strong faith in the U.S. economy by adding 196,000 jobs in a rebound from a weak February.

The jobs report eased fears of a recession as the unemployment rate remained at 3.8 percent, which is near a 49-year low.

“The labor market remains healthy, and [February] is just an outlier,” Brad McMillan, chief investment officer at the Commonwealth Financial Network, tells the Washington Post.

The Labor Department says there were “notable gains” in health care (49,000) and professional and technical services (34,000) jobs in March. Employment in food services and drinking places rose by 27,000. Construction employment was up 16,000; manufacturing employment was down by 6,000.

The Labor Department says it revised its January jobs number up by 1,000, to 312,000, and raised the surprisingly low figure for February to 33,000, up from an originally reported 20,000. With the revisions, job gains have averaged a solid 180,000 during the past three months.

The government says average hourly wages were up 4 cents, or 0.1 percent, to $27.70, in March, which was below economists’ expectations. Wages were up 3.2 percent from March of last year.

“This was a Goldilocks report, with a rebound in job growth to calm fears of an imminent recession, and wage growth that was solid enough without triggering inflationary concerns,” Curt Long, chief economist at the National Association of Federally-Insured Credit Unions, tells Reuters. “The Fed will be pleased, as it supports their present stance of holding firm on rates.”

The Conference Board says its widely followed Consumer Confidence Index fell to 124.1 in March from 131.4 in February. “Consumer confidence decreased in March after rebounding in February, with the present situation the main driver of [the] decline,” Lynn Franco, senior director of economic indicators at The Conference Board, says in a statement.

Eifrion Evans

Eifrion Evans

“Confidence has been somewhat volatile over the past few months, as consumers have had to weather volatility in the financial markets, a partial government shutdown and a very weak February jobs report,” Franco adds. “Despite these dynamics, consumers remain confident that the economy will continue expanding in the near term. However, the overall trend in confidence has been softening since last summer, pointing to a moderation in economic growth.”

The Conference Board says consumers’ assessment of current conditions declined in March. The percentage of consumers who say business conditions are “good” decreased from 40.6 percent to 33.4 percent; those saying business conditions are “bad” increased from 11.1 percent to 13.6 percent.

Consumers’ assessment of the labor market was also less positive. Those who say jobs are “plentiful” decreased from 45.7 percent to 42.0 percent, and those who say jobs are “hard to get” increased from 11.7 percent to 13.7 percent.

Nonetheless, a second major measure of consumer confidence was higher in March. The University of Michigan’s Consumer Sentiment Index rose to 98.4 from 93.8 in February.

“The March gain in the Sentiment Index was entirely due to households with incomes in the bottom two-thirds of the income distribution, posting a gain of 7.1 index points, while households with incomes in the top third fell by 1.1 index points,” Richard Curtin, chief economist of the university’s Surveys of Consumers, says in a statement. “Middle- and lower-income households more frequently reported income gains than [in February], although income gains were still widespread among upper-income households. Indeed, the last time a larger proportion of households reported income gains was in 1966.”

“Rising incomes were accompanied by lower expected year-ahead inflation rates, resulting in more favorable real income expectations,” Curtin adds. “Moreover, all income groups voiced more favorable growth prospects for the overall economy.”

“Overall, the data do not indicate an emerging recession, but point toward slightly lower unit sales of vehicles and homes during the year ahead,” Curtin says.

Eifrion Evans, CEO of Lumishore, the U.K.-based maker of high-performance marine LED lighting systems, says he believes the U.S. economy is in good shape. Lumishore has a U.S. base in Sarasota, Fla.

“The U.S. economy seems very healthy, though there seems to be a little bit of caution in recent months for no clear reason,” Evans says. “The U.S.A. has always been easier to read in that the U.S. always wears its heart on its sleeve and its citizens behave accordingly. When things are good, they go for it — conversely, when things are not so good the drop-off in confidence is reflected in poor sales of consumer goods and luxury items.

“It’s always seemed necessary as part of ‘the Dream’ for America’s citizens to be positive and to crave success,” Evans adds. “For the same reason, whenever the U.S. economy turns down, it does so fast, but it never stays like that for a long period — it’s not consistent with the culture.

“The pessimists, of course, say that there is always a downturn around the corner because there always has been after extended periods of growth. They must be getting bored with being wrong for so long.”

Evans has his own take on how to analyze the U.S. economy.

“The U.S. is still held up around the world as the bellwether for the global economy, so it’s normal for us all to watch GDP numbers and employment gains and losses to get a feel for what is happening in the U.S.A — as the rest of the world will then follow,” he says. “I confess that I have my own favorite personal indicators. Benefiting from having a U.S. family and visiting five or six times a year, I have learned to look at new cars on the highways as an indicator of consumer confidence and the skyline to count the cranes for business confidence. If both are positively looking good, then I know we have increasing buyers in our industry to look forward to.”

Evans says Lumishore’s “excellent performance” continued last year.

“We’ve had compound double-digit revenue and profit growth for the last 10 years, as well as an ever-increasing client base, which indicates that 2019 will once again be another great year,” he says. “We expect the same levels of growth in coming years with our new Lux Collection — fully tuneable above-water lighting, which is available for boatbuilders in 2019. The U.S.A. will continue to be the largest part of our market from our Sarasota base and we have committed to new premises and new staff to support this, with more major developments in 2019 and 2020.”

Bolstered by new product launches, Lumishore expects strong U.S. growth in 2019.

Bolstered by new product launches, Lumishore expects strong U.S. growth in 2019.

U.S. economic growth in the fourth quarter of 2018 was less than initially estimated and suggested that the economy will grow more slowly this year. The Commerce Department says the nation’s gross domestic product grew by 2.2 percent for the quarter, down from the 2.6 percent pace that was estimated in February and down from 3.4 percent in the third quarter. The department said growth for all of 2018 was 2.9 percent.

“I would say the fourth-quarter reading on GDP growth confirms what we already expected,” Ben Herzon of Macroeconomic Advisers tells NPR. “GDP growth is slowing from unsustainable rates.”

The Federal Reserve is forecasting growth of 2.1 percent this year.

“In 2018, momentum accelerated. In 2019, we will see momentum decelerating. The inflection point was really the fourth quarter last year,” Gregory Daco, U.S. economist at Oxford Economics, tells the Washington Post. “This does not mean we’re headed for a recession. It just means growth will slow to about 2 percent this year and next.”

The Conference Board says its Leading Economic Index rose 0.2 percent in February, to 111.5, after a flat reading in January and a 0.1 percent decline in December. The index attempts to predict future economic activity.

“The U.S. LEI increased in February for the first time in five months,” Ataman Ozyildirim, director of economic research at The Conference Board, says in a statement. “February’s improvement was driven by accommodative financial conditions and a rebound in stock prices, which more than offset weaknesses in the labor market components. Despite the latest results, the U.S. LEI’s growth rate has slowed over the past six months, suggesting that while the economy will continue to expand in the near term, its pace of growth could decelerate by year-end.”

Inflation remained tame. After three months with no increase, the Consumer Price Index rose 0.2 percent in February. For the 12-month period that ended in February, the CPI rose just 1.5 percent. The increase in the core rate of inflation, which strips out the volatile food and energy sectors, was 0.1 percent, which was the smallest increase since August of last year. For the 12-month period that ended in February, the increase in the core rate fell slightly, to 2.1 percent.

Interest rates figure to remain steady. The Federal Reserve announced after a mid-March meeting of its policy-making Federal Open Market Committee that the central bank’s benchmark federal funds rate is likely to stay at its current level — a range of 2.25 to 2.5 percent — for the rest of the year.

The central bank has downgraded its growth, unemployment and inflation forecasts and Fed chairman Jerome Powell continues to say that the central bank plans no increase in interest rates as long as inflation remains low.

“The U.S. economy is in a good place, and we will use our monetary policy tools to keep it there,” Powell said at a press conference on March 20 after the Fed meeting. “It’s a great time for us to be patient and watch and wait to see how things evolve.”

“GDP growth is slowing from unsustainable rates. This does not mean we’re headed for a recession. It just means growth will slow to about 2 percent this year.”  — Gregory Daco, Oxford Economics

“GDP growth is slowing from unsustainable rates. This does not mean we’re headed for a recession. It just means growth will slow to about 2 percent this year.” — Gregory Daco, Oxford Economics

The mood among the nation’s small businesses improved slightly. The Small Business Optimism Index of the National Federation of Independent Business inched up 0.5 points, to 101.7, in February.

The NFIB says opinions improved about future business conditions, the prospects for expansion at this time and plans for capital spending.

“Small-business owners are thankful to have the government shutdown in the rear-view mirror, but need more certainty about the future,” NFIB president and CEO Juanita D. Duggan says in a statement. “Small businesses put their money where their expectations are, as we’ve seen when they get tax and regulatory relief. The best thing Washington can do for the small business half of the economy is to continue the policies — tax cuts and deregulation — that leave them with more resources to invest and find qualified workers.”

“Owners still want to grow and expect they could sell more if they could hire employees to produce more. Small businesses want to expand in this growing economy, but only if they can find qualified applicants for their open positions,” adds NFIB chief economist Bill Dunkelberg in a statement.

In the housing market, the National Association of Home Builders says builder confidence in the market for newly built single-family homes held steady at 62 in March on the National Association of Home Builders/Wells Fargo Housing Market Index.

“Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home-buying season,” NAHB chairman Greg Ugalde, a home builder and developer from Torrington, Conn., says in a statement.

“In a healthy sign for the housing market, more builders are saying that lower price points are selling well, and this was reflected in the government’s [January] home sales report released [March 14],” NAHB chief economist Robert Dietz says in a statement. “Increased inventory of affordably priced homes — in markets where government policies support such construction — will enable more entry-level buyers to enter the market.”

In a report that was delayed by the 35-day government shutdown, the Commerce Department initially said sales of new single-family homes fell 6.9 percent in January, to a seasonally adjusted annual rate of 607,000, down from an upwardly revised 652,000 in December.

The new-home market had a change in fortunes in February. The department said March 29 that sales rose 4.9 percent, to a seasonally adjusted annual rate of 667,000 — an 11-month high — and it revised the January figure upward to 636,000 from 607,000. The results suggested that falling mortgage rates were having a positive effect on the market.

Existing-home sales were also strong in February, rising 11.8 percent from the previous month, to a seasonally adjusted annual rate of 5.51 million, the National Association of Realtors says.

The NAR says the increase was the largest month-over-month gain since December of 2015.

“A powerful combination of lower mortgage rates, more inventory, rising income and higher consumer confidence is driving the sales rebound,” Lawrence Yun, the NAR’s chief economist, says in a statement.

The median existing-home price in February was $249,500, up 3.6 percent from $240,800 in the same month in 2018. February’s price increase marked the 84th consecutive month of year-over-year gains.

The NAR says the total housing inventory at the end of February rose to 1.63 million, up from 1.59 million existing homes available for sale in January.

“It is very welcoming to see more inventory showing up in the market,” says Yun.

Yun says the market would benefit from significant new housing this year.

“For sustained growth, significant construction of moderately priced homes is still needed,” he says. “More construction will help boost local economies, and more home sales will help lessen wealth inequality as more households can enjoy housing wealth gains.” 

This article originally appeared in the May 2019 issue.



ABC 2022: That’s a Wrap

The American Boating Congress concluded Friday with an award presentation, discussions with representatives, a midterm election report from political analyst Charlie Cook, and a panel discussion about electrification.


Godfrey Breaks Ground on Expansion

The company said the additional manufacturing and warehouse space in Elkhart, Ind., will enable an increase in production.


Highfield USA Hires New President

The RIB builder said Christophe Lavigne will help develop the brand and operations in North America.


ABC 2022: A Full Schedule

The second day of the American Boating Congress included awards presentations, Capitol Hill sessions with lawmakers, an economic report, a state-of-the-industry address and statements from NMMA lobbyists.


Gas Prices Soar to Record Highs

Oil supply concerns have lifted the average U.S. price of regular unleaded gasoline to $4.432 per gallon, according to AAA.


All-Women Team Designs New Sea Ray

Parent company Brunswick Corp. said the achievement highlights its successes in promoting diversity in the marine workforce.