E An Extremely Strong US Job Market In The Middle Of The Trump Mandate

The US job market heated up right through all of 2018 and into January of this year. Virtually all indicators suggest that the demand for labor in 2019 will again run ahead of the supply of new workers looking for employment.

There are numerous signs of how robust the US job market really is. For example, the number of American workers who voluntarily quit their jobs rose again last year. The increase in the voluntary quit rate is a strong indicator of job market confidence and is also consistent with the recent step up in average hourly earnings.

The number of unfilled job vacancies also rose steadily last year, and though the hiring rate also increased, there is a huge number of vacant jobs.

The so-called mismatch index, which provides a measure of the imbalance between the characteristics of job openings and unemployed workers, indicates that many of the existing unemployed could not fill the job requirements. The mismatch ratio has increased over the past year.

Interestingly enough, the employment-population ratio has also been rising but is still somewhat lower than the level reached just prior to the Financial Meltdown in 2008.

The labor force population ratio seems to have stabilized at a somewhat low level since 2016. The low level of the participation rate suggests there is still some potential labor which could be available to enter the workforce.

Despite the extremely low unemployment rate (4% in January), wage inflation has remained unusually modest considering how tight the job market appears to be. Annual wage growth, as measured by average hourly earnings, has struggled to break through the 3% pace at the end of 2018.  

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