The US job market performed better than economists expected during President Trump’s first full year in office. Repeating such gains may be considerably tougher in 2018.
The economy probably added 2.11 million jobs in 2017, including an estimated 190,000 workers in December, the median projection of economists surveyed by Bloomberg ahead of Labor Department data due Friday. That would exceed the roughly 1.98 million that analysts were forecasting before the year began. The expected unemployment rate of 4.1 percent last month, unchanged from November, is well below the 4.6 percent economists had penciled in a year ago for the fourth quarter.
While not impossible, a similar performance is seen as unlikely given the jobless rate is below what the Federal Reserve regards as sustainable and employers are struggling to find quality applicants to fill openings. Even with an expected growth boost from Trump’s signature achievement of a $1.5 trillion tax overhaul, economists project job gains to fall back a bit — a trend that carries a potential silver lining of a long-awaited acceleration in wages.
The 2017 job gains are ‘‘pretty solid, particularly in an economy that by most traditional measures is at or beyond full employment,’’ said Mark Vitner, senior economist at Wells Fargo Securities. ‘‘With the labor market tightening, it is tougher to fill openings, so you would expect employment to slow a bit.’’
In fact, that’s already happened. Put into a broader context, 2.11 million jobs would be the smallest gain since 2011 and extend a natural slowdown from a recent peak of 3 million jobs in 2014 under predecessor Barack Obama.
Trump often touts the job gains and low unemployment rate, crediting policies including tax cuts and deregulation for contributing to rising business confidence and a surging stock market. At the same time, employment has benefited from the momentum of an eight-year-old expansion begun under Obama as well as accelerating global growth.
‘‘The entire global economy had a very good 2017,’’ said Mark Zandi, chief economist with Moody’s Analytics in West Chester, Pennsylvania, who works with ADP Research Institute on a separate monthly private payrolls report. ‘‘It’s a very good performance, about as good as you could hope for.’’
Trump last month signed into law the most extensive rewrite of the US tax code in 30 years. The legislation cuts the corporate tax rate to 21 percent from 35 percent and reduces taxes on most individuals.
Zandi estimates the tax overhaul is likely to spur an additional 300,000 jobs in 2018, though he says 2017’s gains mainly reflected momentum in the economy that carried over from the prior year.
Economists surveyed by Bloomberg see US employment gains slowing to 154,000 a month by the fourth quarter from roughly 176,000 a month in 2017, according to the median estimate in a survey last month before the tax bill passed.
The reason: workers are just becoming more scarce. Thirty percent of small-business owners had job openings they couldn’t fill in November, according to the National Federation of Independent Business’s monthly survey. Hiring qualified workers was ranked as the second most-important problem, after taxes.
