A “Now Hiring” sign is seen at a FedEx store on Broadway in New York City on June 7, 2024.
Michael M. Santiago | Getty Images
Why does momentum slow down?
Good news: This number is up from the 89,000 jobs added in July. The unemployment rate also fell slightly to 4.2% from 4.3% in July.
But Ernie Tedeschi, director of economics at the Yale Institute for Budget Studies and chief economist on the White House Council of Economic Advisers under the Biden administration, said several indicators point to “slowing momentum” in the overall labor market. He said that
He said current levels of job growth and unemployment “are fine for the U.S. economy to sustain for many months.” “The problem is, other data doesn’t give us confidence that we’re going to stay in this situation.”
For example, the average employment growth over the past three months was 116,000. A year ago, the three-month average was 211,000. The unemployment rate has also been steadily rising and was 3.4% as of April 2023.
Employers are also hiring at their slowest pace since 2014, according to separate Labor Department data released earlier this week.
Employment is also not widespread. Private sector employment growth outside the health and social assistance sector has been “unusually slow”, averaging around 39,000 jobs over the past three months, compared with an average of 79,000 over the past year. From 2015 to 2019, the number was 137,000, according to Julia Pollack, ZipRecruiter’s chief economist.
Worker turnover is also at its lowest since 2018, and job openings are at their lowest since January 2021. Turnover rate is a barometer of whether workers have confidence in their ability to find a new job.
The employment situation for the unemployed is about the same as it was in 2017 and “continues to trend downward,” Bunker said. said.
“We have a very consistent picture where the strong labor market momentum that we saw in 2022 and 2023 has slowed significantly,” Tedeschi said.
Overall, he added, the data points are “not necessarily concerning and we’re not at recession level yet.” “(But) the economy is getting softer. It could be a sign of a recession.”
Why layoff data is a ray of hope
But economists said there was room for optimism.
Tedeschi said permanent layoffs, which have historically been considered a “prophecy of recession,” haven’t really moved.
federal data For example, unemployment insurance claims and layoff rates suggest that employers are keeping employees on.
Economists say the recent slow rise in the unemployment rate is not primarily due to layoffs. This was for the “good” reason of a significant increase in labor supply. In other words, more Americans entered the job market and looked for work. They are counted as unemployed until they find a job.
“Once we start seeing layoffs, it’s over and we’re in a recession,” Tedeschi said. “And nothing like that is happening at all.”
Still, Bunker said the job search has become more difficult for job seekers than it has been in recent years.
Relief from the Fed won’t come soon enough.
Federal Reserve officials are expected to begin cutting interest rates at a meeting this month, which would ease pressure on the economy.
Lower borrowing costs may encourage consumers to buy homes or cars, for example, and businesses may invest more and hire more workers in response.
Economists said this relief is unlikely to happen immediately and it will likely take months for the economy to recover.
But overall, the current situation “remains consistent with the economy experiencing a soft landing rather than plummeting into recession,” Paul Ashworth, chief North American economist at Capital Economics, said Friday. mentioned in the memo.
