March Jobs Report: Black Unemployment Hits Record Low Despite Weaker-Than-Expected Job Growth

Dr. Bernard E. Anderson
Whitney M Young, Jr. Professor Emeritus, The Wharton School, University of Pennsylvania
Senior Economic Advisor, National Urban League

Private employment growth in March was weaker than expected; with 236,000 jobs added and most industries showed little or no change in employment. 

Wage growth reflected a gradual easing of tight labor markets, though the job opening/available worker gap remained large. . Fewer employers are raising wages to retain labor and attract new employees.  Some firms in the technology industry have laid off or are planning to pay off about 10 thousand workers. At the same time, the leisure/hospitality industry and health care are vigorously seeking employees. Overall there are about one million more jobs open than workers seeking employment.
The Black unemployment rate sank to the lowest point on record in March, 5%, shrinking the Black/white ratio to 1.56:1
Incoming data on consumer spending, business investment, trade, government spending and employment creation suggests that in the absence of an unexpected shock, the economy, GDP, should grow between 1.5% and 2.0% over the next several quarters.  That suggests a soft landing from the Covid-induced contraction.  But if the economy gets off track, the data suggests  a short, shallow recession.  Under those conditions the unemployment rate might rise to the neighborhood of 4.0%. The racial unemployment gap narrows when employment grows at a rate above 300,000 per month.

The mixed economic data suggests that the U.S. might escape a recession.  In the absence of an unexpected shock, recent trends in consumer spending, business investment, government spending, and trade, any contraction is likely to be short and shallow.

In response to the report, the Federal Reserve is likely to raise the federal funds rate by only 25 basis points at the next FOMC meeting. Inflation remains at an elevated level, but the labor market is providing less fuel to worsen inflation in the immediate months ahead.