Opportunities and Challenges in the U.S. Labor Market: An Update

Recently we have seen noticeable improvement across a broad range of economic indicators. Second-quarter GDP growth rebounded strongly after the negative first quarter. Manufacturing has been particularly strong, with the ISM index reaching its highest level in over three years, and motor vehicle assemblies in the second quarter at the highest rate since 2006. In addition, the Conference Board sentiment index in August reached its highest level of the recovery.Perhaps no recent economic development has been more surprising than the rapid fall in the unemployment rate and commensurate pickup in the rate of job growth this year. For most of the last several years, the Blue Chip consensus forecast expected the unemployment rate to be around 7 percent right now. As recently as last year, the consensus forecast did not have the annual average unemployment rate falling below 6.1 percent until 2017.