For the first time in six years, the US unemployment rate has fallen below 6%. The US economy added 248,000 jobs in September, beating expectations and sending the unemployment rate from 6.1% to 5.9%. This is the healthiest the US job market has been since July of 2008.
Numbers for July and August were also revised up. An additional 69,000 jobs were added to the previous two months. The revision is particularly good for August, which had job growth below 200,000. Prior to August, the US had several consecutive months of job growth above 200,000.
The September job number is just the latest is a series of good economic reports. US GDP grew at 4.6% in the second quarter, one of the highest numbers in years. The US trade deficit is narrowing thanks to strong exports. The dollar is also rising against foreign currencies.
On the government side, the federal deficit is also shrinking. The government is projected to run a $506 billion deficit this year, down from $680 billion last year. This is the fifth consecutive year the deficit has fallen. The deficit has declined as a share of the nation’s GDP from a high of 9.8% in 2009, to 2.9% this year. That is below the historic rate of 3.1% over the last four decades.
Following Friday’s report from the Bureau of Labor Statistics, there are two key situations that need to be monitored. One is the labor participation rate, which is at its lowest level since 1978. Time will tell if that is due to lack of jobs or simply an aging population. The other key situation to watch is the Federal Reserve, which could begin to raise interest rates now that we are approaching full employment once again.