Economists and some Federal Reserve officials are increasingly on alert that pain could be on the horizon for American workers amid signs the labor market is losing steam.
Companies are posting fewer job openings this year and employees are quitting less as unemployment has begun creeping up from low levels, signaling the end of the historically tight labor conditions that characterized the rapid recovery from the pandemic shock.
Strength in hiring has so far helped the economy weather aggressive Fed tightening, which brought interest rates to the highest levels in two decades. With inflation still running above the central bank’s 2% target, the fear is that any further softening in labor conditions could start to snowball and put economic growth at risk.
“Any change in the outlook for the labor market could have significant implications for the direction of the economy and monetary policy,” said Rubeela Farooqi, chief US economist at High Frequency Economics. “If there is one thing we know for sure, it is that conditions change very quickly.”
Two key reports this week from the Bureau of Labor Statistics — Tuesday’s monthly update on job openings and Friday’s on broader employment trends — will offer more clues about where the labor market is headed.
The first — the Job Openings and Labor Turnover Survey release, known as JOLTS — showed total listings for open positions bounced in May from a three-year low the month before. They are down about a third from the peak of 12.2 million reached in 2022, when employers hampered by labor shortages were struggling to keep up with a surge in demand as the economy reopened.
There are now just 1.2 postings for each person looking for work, similar to pre-pandemic levels. The quits
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