Encouragingly, labor force participation has held up, as the tight labor market has motivated workers to either join or remain in the labor force, halting, at least for the time being, a long-standing downward trend. Although the pace of job gains has slowed this year, we expected some deceleration because of how low the unemployment rate has fallen.
A strong job market and high employment have in turn supported economic growth. Personal consumption expenditures (PCE) grew 2-1/2 percent over the past four quarters, a healthy pace by historical standards and a major contributor to overall growth since consumption represents over two-thirds of economic activity.