If there is a slowdown, I would expect this rate to plateau, in the 3.7%-3.9% range, similar to its plateauing in 2015-16, when we had the “shallow industrial recession.” Obviously there’s not enough there to make a call at this point, but this is a data point I’ll be watching.
On the “firing” front, the easiest place to look is the weekly initial jobless claims report, particularly in the less volatile 4 week moving average. Here’s what that looks like over the past 5 years:
Again, note that from roughly spring 2015 through spring 2016, the decline in weekly jobless claims almost stalled out. Here’s what the same data looks like measured as a YoY% change:
During the “shallow industrial recession,” the YoY% decline in new jobless claims rose from roughly -10% to -5%, with a fair amount of noise. I would be looking for a similar move over the next 8 months, to the range of -5% or even flat YoY. [Note: the spike upward in late 2016 was due to the hurricanes, leading to a similar spike downward one year later.]
On a weekly basis, this means I am looking for initial jobless claims to stay above 200,000, except for an occasional weekly outlier, and for the 4 week average, which at midyear this year was in the 220-225,000 range, to be in the range of 207,500 to 220,000 at midyear 2019.
Needless to say, I am also looking for monthly employment gains to decline back significantly below 200,000 by that time.