March Jobs Report: Economy Moving Steadily Toward Stable, Balanced Growth

Bernard E. Anderson, PhD
Whitney M. Young Professor Emeritus,
The Wharton School of the University of Pennsylvania
Chief Economic Advisor, National Urban League

Payroll employment rose 303,000 in March and the unemployment rate changed little at 8.3 percent.  The labor force participation rate edged up to 62.7 percent, reflecting increased participation of women and immigrants.

There was a demographic split in the employment experience of two major racial groups: The number of Black employed declined 204,000 while white employment grew 601,000. Similarly, unemployment edged up slightly among Black workers, but declined among White workers. As a result, the Black/White unemployment disparity edged upward to 1.88, still below the persistent 2:1 ratio.

Average hourly earnings rose 0.3% to $34.69; average weekly hours remained unchanged at 34.1, producing average weekly earnings of $1,193.34.

Employment grew about 100,000 among Hispanic workers, while the number of unemployed fell by slightly more than employment rose. That reduced the Hispanic unemployment rate by 0.5 percentage point. The Hispanic numbers partly reflect the impact of immigration on the labor market.

Hispanics comprise the majority of the 13,750 million immigrants in the U.S. labor force; their labor force participation rate exceeds that for the workforce as a whole.  Employment among immigrants grew 583,000 in March.  A disproportionate number of Hispanics are employed in the leisure/ hospitality and construction industries, two of the four industries that accounted for the bulk of job creation in March. Sadly, six Hispanic immigrant workers were killed in the tragic bridge collapse in Baltimore. The data shows that immigration is contributing significantly to labor market balance as the economy continues on the path of non-inflationary growth.

 The economy is on a path of modest growth coupled with slowly declining inflation. The Federal Reserve continues to implement restrictive monetary policy aimed at reducing inflation to the target 2.0 percent.

As labor markets moved into better balance, wage growth cooled.  The 12 month growth of average hourly earnings in private services has been down about 4 percent from a peak of 6 percent in early 2022. Wage growth is moving toward the rate that is consistent with  a  2.0  percent inflation rate.

As supply and demand adjustments continue on their current path inflation expectations are likely to remain well anchored and  consumers will feel better about stability in their purchasing power. GDP growth is expected to be solid but somewhat slower than last year’s 3.1 percent pace.

But the near-term future is uncertain, there ae risks to the outlook for economic activity.  Global developments such as wars in Europe and the middle east could spark an increase in commodity prices or further disrupt supply chain networks.  The bridge collapse in Baltimore and its effect on the Port of Baltimore could pose some risk in shipping networks.

In short, the economy is moving steadily toward stable, balanced growth in an environment of declining inflation.  If incoming data suggests that the current trend is sustainable, the Federal Reserve is likely to begin cutting interest rates in the third quarter.  Public reaction to the outlook, especially the decline in inflation will be a major factor in determining the outcome of the presidential election.