Veronica Clark, a Citi economist, expects 490,000.00 jobs to be created in the United States during March. The unemployment rate will fall to 3.7%.

She believes that Fed will be able to concentrate more on inflation because of the consistent strong job data over the past months. Thus, she predicts 50bp rise in May.

If the Fed sees further falls in unemployment as a sign of a tight labor marketplace, they will be more likely to move rates back toward their long-run neutral rate. Clark in a client letter stated that we expect very low unemployment rates throughout summer to back our base case of 50bp increases at the four FOMC meetings. This would imply that the Feds nominal long-run neutral rate of 2.5% will be reached by September.

The economist doesn’t expect to see continued robust job growth despite a strong labor market. However, as the available workforce continues to shrink, it is unlikely that the economy will experience a sustained surge in demand.

Clark anticipates that Clark’s hourly average earnings will rise by 0.3% MoM.

By Senad Karaahmetovic