More jobs at higher pay means more people working

With the unemployment rate so low, many economists have expected hiring to decline as businesses face a dwindling supply of unemployed people. Yet that hasn’t happened. Average monthly hiring this year is above the pace of 2017.

The vigor of the job market is helping lead some Americans who were neither working nor looking for work to begin seeking a job. (People who don’t have a job aren’t counted as unemployed unless they’re actively looking for work.) In October, the proportion of Americans with jobs reached its highest level in 10 years.

Many of employers’ most recent hires had struggled through much of the nation’s 10-year recovery from the Great Recession. The proportion of people without a high school diploma who are now working is the highest on records dating to 1992. And the proportion of teenagers with jobs is at the highest level in a decade.

Consumers spending freely

More jobs at higher pay have helped underpin a burst of consumer spending. The Trump administration’s tax cuts have likely also contributed. Americans increased their spending by 4 percent in the July-September quarter, the biggest acceleration in nearly four years. That spending helped the economy grow at a 3.5 percent annual rate last quarter.

Yet Americans are still saving a decent chunk of their income, with little sign that most people are amassing a risky level of debt. Savings equaled roughly 6.4 percent of income in the third quarter, up from a low of 2.5 percent in 2005.