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How to spot a weak, overheated labor market

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Rebecca Valli

On Friday, the Bureau of Labor Statistics will release its monthly job report. Since the end of the Great Recession, the labor market improved steadily and analysts will be looking at the numbers in the job report for clues on how much longer that expansion will last, says Erica Groshen.

Erica Groshen

Visiting Senior Scholar at the School of Industrial and Labor Relations

Erica Goshen is a visiting senior scholar at Cornell University’s School of Industrial and Labor Relations.   

Before joining Cornell, Groshen was a vice president and economist in the Research and Statistics Group at the Federal Reserve Bank of New York and served as the 14th Commissioner of Labor Statistics from January 2013 to January 2017. 

Groshen says:

“On Friday, analysts will be watching for signs of that the labor market is weakening, overheating or becoming more inclusive.

“Signs of weakening could include payroll job growth well below 100,000, declining hours worked or a big reduction in temporary help employment. 

“Signs of overheating could include a drop the unemployment rate, a rise in overtime hours, and fast growth in average hourly earnings. 

“More inclusion would be manifest in lower long-term unemployment, few workers who are discouraged or working part-time for economic reasons (that is, involuntarily), and lower unemployment rates for youths, African-Americans and Hispanics.”

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