At 98,000, the number of net new jobs created in March was soft, coming in below the 180,000 median estimate of economists surveyed by Bloomberg. The report calls into question the narrative of an economy on autopilot that continues to generate strong job growth amidst rising rates. The downward revision of 38,000 fewer jobs for the previous two months only adds to those questions.From the Atlanta Fed:
The most recent quarterly Fed member forecasts show a path of higher rates, with a mean estimate of 1.4 percent for the end of the year, which is up from the current target range of 0.75 percent to 1 percent. And some market participants had become even more hawkish than members of the Federal Open Market Committee.
Although the Fed has a dual mandate to support full employment and contain inflation, its policy is not on a set course. Yes, the economy is at full employment, but the slower March job gains will make the April employment report critical for determining if the latest number is a blip or the start of a new trend.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.6 percent on April 7, down from 1.2 percent on April 4. The forecast for first-quarter real GDP growth fell 0.4 percentage points after the light vehicle sales release from the U.S. Bureau of Economic Analysis and the ISM Non-Manufacturing Report On Business from the Institute for Supply Management on Wednesday and 0.2 percentage points after the employment release from the U.S. Bureau of Labor Statistics and the wholesale trade release from the U.S. Census Bureau this morning. Since April 4, the forecasts for first-quarter real consumer spending growth and real nonresidential equipment investment growth have fallen from 1.2 percent and 9.7 percent to 0.6 percent and 5.6 percent, respectively.