Every year, around December and January, economists and market researchers gather up facts and figures from the previous 12 months and make bold predictions for the following fiscal calendar. Industry big wigs weigh in on every aspect of the economy, from job creation and inflation to wages, consumer spending, and even gas prices and other commodities. But just how far do those predictions hold up as the years unfold? I thought it’d be interesting to take a look at some of the major predictions made by top economists for the 2015 fiscal year and to see how they stack up against data from the last four months.
If you were looking for a job in 2014, odds are you found one. Unemployment fell to 5.6% in December, and consistently fell month over month. November saw the addition of 350,000 new positions to the U.S. workforce, and the following month featured an increase of 250,000 jobs, which capped a year in which only two months featured job growth of less than 200,000 positions, the largest increase in jobs across the country since the late 1990s.
Based on the positive gains we saw in 2014, economists called for continued job market expansion in 2015. FORBES Magazine online writer Bill Conerly even went so far as to call the job creation outlooks “solid.” And, so far, Bill and other analysts have been right on the money. Optimists like Paul Davidson of USA Today have missed the mark a little, with bold predictions of “300,000 new jobs a month” falling short so far this year. But we’re still in the early stages of 2015, and the numbers for April have yet to be released by the Bureau of Labor Stats, so I think it might be too soon to call foul on that prediction just yet.
The job creation statistics released by the U.S. Bureau of Labor Statistics month-to-month for 2015 show positive gains and steady increases in employment. In January, the workforce saw roughly 250,000 jobs added to the market, with another 295,000 added in the month of February. March dipped well below the trends set over the last five or six months with only 126,000 jobs added, but economists still remain optimistic for April and the rest of 2015, with many industries still experiencing significant gains. The big winners for the month of March included retail sales, healthcare, and professional and business services.
Inflation and other economic factors have pushed the average national wage higher and higher each year. People are making roughly 15 times as much as they were when the Social Security Administration began tracking data on national average wages annually in 1951. In 2013, the average national wage was $44,888.16, up more than one and a quarter percent from the year before.
The federal minimum wage currently rests at $7.25 per hour. However, many areas of the country already have in place measures to increase minimums at the state level. According to a recent article written by Alison Doyle on AboutCareers.com, 17 states will see increases in minimum wage over the next 12 months, with many others to follow suit in 2017 and 2018.
While economists predicted increases in wages for 2015 as a result of increased consumer spending the previous year, workers across the country may have to wait until January 1, 2016 to see any real kickbacks or benefits. Even with talks to raise the federal minimum wage to as much as $10.00 per hour, no concrete plans have resulted, and legislation to bring about rises in minimum wage at the federal level have been shot down.
As I mentioned earlier, 2014 saw increased consumer spending across most industries. People spent more, which stimulated businesses and lead to expansion and job creation. The 2014 holiday shopping season was highlighted by the addition of more than 800,000 temporary positions, a mark not seen since 1999. Market analysts report between 4% and 5% increases holiday sales, which means better fourth-quarter returns for both major companies and small businesses. The bump in sales means extra revenues and additional funds to grow operations and hire on new employees.
But consumer spending has taken the opposite turn in 2015. Americans are saving money instead of spending it, which has resulted in declines in overall spending by the general public through March. Market analysis shows a slow growth in the first quarter of the 2015 calendar, with consumer spending falling 0.2% in January from December and only gaining back 0.1% in February from January.
Instead of spending like market analysts predicted, American consumers appear to be saving their paychecks in 2015. The slow first quarter numbers contradict what job market gurus thought was going to happen based on the steady increases in spending that rounded out a strong second half of the year in 2014. The market may still pick up, as we’re just underway in 2015, but so far, it looks like people seem apprehensive to spend their cash, which may limit opportunities for growth among smaller businesses and mega corporations alike.
Many economists believe inflation won’t play factor in this year’s market. Lower gas prices have already allowed consumers to feel more at ease since they aren’t paying nearly as much at the pump, and minimum wages are expected to rise in several states by the end of the year. The national unemployment rate has steadied out and sits right around year-over-year averages between 5% and 6%. With the market the way it is, things are looking good for job seekers. Employment should remain steadily available across industries and provide sound pay. Remember, market predictions don’t always add up to the way things turn out. Do your homework and prepare for any situation. Just because the market looks strong today doesn’t mean it will tomorrow. But if things keep going the way they are, I think tomorrow looks good for anybody.