One of the most interesting and confusing parts of the economy right now is the labor market. Inflation is super high right now, yet employment is doing perfectly fine. Ever since the unemployment spike during the pandemic, things have been going too good for jobs. It’s gotten to the point where the Federal Reserve was happy that hiring slowed down for a bit, and the data is interesting.
Currently, demand is easing for workers, but it still is pretty high. There are currently expected to be 11 million job openings in the United States, which exceeds the 5.9 million workers who are unemployed but are currently looking for a job. Jobless claims are at their highest point since November, signaling layoffs, and we’ve seen some from big companies already. Shopify laid off 10 percent of their workers, and Robinhood is cutting 23 percent of their workforce. Wage growth is continuing to be strong due to high demand for jobs, but it isn’t fast enough to cope with inflation. This strong job market is one of the main indicators that the economy is currently not undergoing a recession. Trends show that this has to continue to cool down, and it’ll be interesting to see the long-term effects of interest rates on employment numbers.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.