Shooting Hoops: Job Growth and the Economy

Shooting Hoops

Chief Executive Officer
Stephen Hoops

Posted: 1/14/2018

Source: BLS

Job Growth and the Economy

The economy was very stable in 2017, as you usually have some seasonality and more instability in the month to month trends. That’s an incredible thing, considering that you can see, even on this brief timeline, that you experience an economic downturn every 6-8 years. That typically is followed by periods of job loss. We are now 10 years past the previous downturn and are still experiencing a very steady upward trajectory in the economy, which is unheard of in modern economic history in the US.

One of the major differences that has occurred in the past 10 years, has been the slower and steady improvements the economy has seen, especially in the GDP and housing index. Normally, you would see a lull for 2 years, a steep run-up for 3-4 years, then 1-2 years of stagnant trends. We have seen a steady climb from 2010 through today, which seems to have forced (IN MY OPINION) a double cycle. My personal forecast and read, based on my direct experience within several large financial institutions through 3 economic cycles, is that we will now see a cycle that is closer to 14-15 years. Basically, causing a normal 6-8 year cycle double up.

Many financial economists have continued re-adjusting their forecasts for the next downturn. It was originally 2016, which would have aligned to a normal economic cycle, but then quickly adjusted timelines to project 2018 and, just last year, readjusted to 2020. My forecast is that we will not see the next cycle start (meaning another mild downturn) until somewhere in 2022-2023 or, if we are lucky, 2024.

The job tracking above has always been a great indicator for banks to leverage that statistics (weekly trends) with the housing index and GDP to generate portions of their loss modeling and loan loss reserve models. These will continue to be great predictors of our economic cycles within the US, and we will continue to monitor them as we keep enjoying the longest positive trajectory in recent US economic history.

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