Some economists said they expect a slowdown this spring, though not as bad as in the past three years.
“We don’t anticipate the slowdown becoming too severe, not when the housing recovery is firing on all cylinders, but it is a reminder that the U.S. is still unable to sustain what used to be just average rates of growth,” said Paul Ashworth, an economist at Capital Economics.
The decline in the work force reflects several trends, economists say: Many of those out of work become discouraged and give up on their job hunts. And as the population ages, more people are retiring.
And Gary Burtless, senior fellow in economic studies at the Brookings Institution, notes that many Americans have likely stopped looking for work because their unemployment benefits have run out.
“If people aren’t collecting benefits, they have one less reason to be out pounding the pavement looking for a job,” Burtless says.
Most analysts think the economy strengthened from January through March, helped by the pickup in hiring, a sustained recovery in housing and steady consumer spending. Consumers stepped up purchases in February and January, even after Social Security taxes increased this year.
Still the higher taxes have reduced paychecks. And many economists say steep government spending cuts that began taking effect March 1 will slow growth in the spring and summer.
Nariman Behravesh, chief economist at IHS Global Insight, said employers may be slowing hiring in anticipation of the impact of the spending cuts.
As federal agencies and contractors cut back in coming months, Behravesh expects jobs growth to average 100,000 to 150,000 a month, down from an average 212,000 from December through February.
“The good news is that this is happening at a time when the private economy is gaining momentum,” Behravesh said. He expects hiring to pick up after mid-year.
Mark Vitner, an economist at Wells Fargo Securities, thinks the economy expanded at a 3.2 percent annual rate in the first quarter. But he forecasts that growth will slow to a 2 percent annual pace in the current second quarter, and then rebound after the impact of the government spending cuts fades.