National Economic Council Director Larry Kudlow predicts that the nation’s unemployment rate, already near a 49-year low of 3.7 percent, can still plunge even lower.
“Unemployment has more downside to go,” the veteran financial guru and former Ronald Reagan adviser told Bloomberg Television.
“I don’t want to give a forecast per se, but I do think it can go lower,” he said after the Labor Department announced the drop of two-tenths of a percentage point in the unemployment rate from 3.9 percent in August pushed it to levels last seen in December 1969 and matched the Fed’s forecast of 3.7 percent by the end of this year.
Average hourly earnings increased 0.3 percent in September after a similar rise in August, Reuters reported.
“I think people are moving back into the workforce as wages and incentives increase,” said Kudlow, who served as the Trump campaign's senior economic adviser.
“With lower taxes, you got fatter paychecks that’s going to bring more people into the workforce. We’re growing in a capital goods boom, said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
In a separate interview with Fox Business Network, Kudlow said Friday's report was actually very good despite U.S. job growth slowing sharply in September, likely as Hurricane Florence depressed restaurant and retail payrolls.
Kudlow also predicted overall job creation in the U.S. will likely top 2 million by the end of the year.
“If you’re going to run 200,000 or 220,000 jobs a month, that’s pretty close to what we’re talking about, you're going to get 2.4, 2.6 million jobs a year,” Kudlow told Fox Business Network. “That is very, very good, and it’s steady," he said.
“Because of low tax rate and deregulation, I think it is a strong jobs picture. And we are at 3.7 unemployment rate, that is an awful good number and across the board. The so-called minority unemployment rates are coming down,” Kudlow said in explaining his optimism for the future.
The Labor Department’s closely watched monthly employment report on Friday also showed a steady rise in wages, suggesting moderate inflation pressures, which could ease concerns about the economy overheating and keep the Federal Reserve on a path of gradual interest rate increases.
Nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment. Data for July and August were revised to show 87,000 more jobs added than previously reported.
The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.
“The weaker gain in payrolls in September may partly reflect some hit from Hurricane Florence,” said Michael Pearce, senior U.S. economist at Capital Economics in New York. “There is little in this report to stop the Fed continuing to raise interest rates gradually.”
Economists polled by Reuters had forecast payrolls increasing by 185,000 jobs in September and the unemployment rate falling one-tenth of a percentage point to 3.8 percent.
Fed Chairman Jerome Powell said on Tuesday that the economy’s outlook was “remarkably positive” and he believed it was on the cusp of a “historically rare” era of ultra-low unemployment and tame inflation.
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