Back in 1969 - October 8, 2018

Back in 1969, Richard Nixon had just become president, the Vietnam War was raging, Neil Armstrong had landed on the moon, and the unemployment rate ended the decade at 3.5%. Fast forward 49 years and the unemployment rate is back at levels last seen in 1969 – see Figure 1.

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On Friday, the U.S. BLS reported the jobless rate fell from 3.9% in August to 3.7% in September, the lowest rate of the economic expansion. For that matter, we must go all the way back to 1969 to find a lower rate. September’s number knocked out the former low of 3.8% in April 2000.

Meanwhile, nonfarm payrolls rose 134,000 per the U.S. BLS. September’s number came in below expectations (Briefing.com), but August’s payrolls were revised upward to 270,000 from the initial report of 201,000. It’s a significant upward revision.

We would expect to see strong numbers in some months and softer numbers in other months. Statistical noise sometimes obscures the longer-term trend. That probably played a role in September’s slowdown.

Figure 2 illustrates the longer-term trend. The graphic highlights that the average monthly increase in nonfarm payrolls over the last nine months has been a solid 208,000. It’s the largest increase since 2014.

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  • The expanding economy is generating job growth, albeit, unevenly; expect monthly variations.

  • The falling unemployment rate points to a tighter labor market—advantage employee.

  • Wages are rising modestly but nothing to suggest a strong acceleration.

  • There is little in the report that might discourage the Fed from hiking rates one more time this year or encourage the Fed to get more aggressive.

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