Unemployment expected to fall to 3.5%

Somehow missing from Rep Joe Kennedy III’s (#droolingJoeKennedy) response to the President’s State of the Union Address, is that the U.S. is headed for a jobless rate of 3.5% this time next year. This according to Mark Zandi, chief economist at Moody’s Analytics, a level reached in only two other periods since the government began keeping such records in 1948.

In a call with reporters this week, Zandi described a “rip-roaring job market” that includes accelerating increases in wages. His jobless projection is just outside the lower range of the Federal Reserve’s full-year 2019 forecast of 3.6%-4.0%.

• In a report today, the U.S. Bureau of Labor Statistics said that wages and benefits rose 2.6% in 2017, matching the highest rate since 2008, writes the WSJ’s Sarah Chaney. That is up from 2.2% in 2016. Again, it’s a sign that workers are benefitting alongside companies and Wall Street from broad economic growth.
• “That’s what we’d expect to see as the labor market keeps tightening,” Jed Kolko, chief economist at Indeed, tells Axios. “Firms need to raise wages, adjust hiring requirements, or invest more in training in order to get the workers they need.

Harry Holzer, a professor at Georgetown University and former chief economist at the Labor Department, tells Axios that one thing that could interfere with the optimistic forecasts is the Fed, which could accelerate interest rate hikes to forestall inflation.

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