May 2023 Jobs Report Signals A Weaker Economy For New Graduates

The Could 2023 jobs report might give the Federal Reserve another excuse to pause on rate of interest hikes and another excuse new graduates shouldn’t burst into the interview room asking for an enormous elevate and distant work.

Staff might have a tougher time getting the pay and perks they noticed simply final 12 months. Employee energy could also be down.

The unemployment price elevated from 3.4% to three.7%, however we want extra indicators than that to conclude the financial system is weakening.

In spite of everything, the unemployment price is a lagging indicator — reflecting the availability and demand of staff a number of months in the past. (Keep in mind, the Nice Recession began in December 2007 however the unemployment price continued to fall till February 2008 because the recession was in full swing.)

Different indicators level to a weaker financial system; Everlasting layoffs are the next share of the unemployed — 48.9% in Could, which is a 7-percentage-point improve from a 12 months in the past. And former White Home economist Betsey Stevenson notes that households reported job losses and employers reported job positive factors — one other signal of weaker numbers.

Older Folks Nonetheless ‘Retired’ Alerts A Weakening Economic system

Owen Davis, a researcher on the Schwartz Heart for Financial Coverage Evaluation, factors out a persistently excessive share of individuals ages 55 to 64 are saying they’re retired. Earlier than the Covid-19 pandemic, the share of those that reported being retired in that age group was between 16% and 17%; now it’s 17% to 18%. We all know older persons are extra prone to be pushed out of the labor drive, so being retired could also be a extra socially acceptable approach to say they had been laid off and might’t discover one other job. The truth that this group of skilled staff just isn’t going again into the labor drive exhibits a softer demand for staff.

Falling Employee Confidence Alerts A Weakening Economic system

On Could 31, the JOLTS numbers confirmed employee confidence falling considerably from final 12 months; stop charges fell to 2.4%, means down from the April 2022 quits price of three.0%.

In Friday’s Bureau of Labor Statistics report, the same indicator of low employee confidence — the “job leavers” share of complete unemployed folks — exhibits continued softness. The share fell sharply to 12.6% in comparison with April’s price of 13.3% and means down from a excessive of 15.3% in January 2022.

Actual Wage Decline Alerts A Weaker Economic system

Companies are elevating costs quicker than they’re elevating wages. Staff may even see a wage hike on paper however greater costs are eroding their shopping for energy. Common weekly earnings for all personal sector staff in Could had been $1,146.99 per week, up from $1,109.28 from a 12 months in the past. However to maintain up with inflation, staff wanted about $17 extra.

Inverted Yield Curve Alerts A Weaker Economic system

One other signal {that a} recession could also be underway is an inverted yield curve — the unfold between 10-12 months Treasury Fixed Maturity and 2-12 months Treasury Fixed Maturity bonds adjusted for inflation. The damaging yield curve factors to a recession.

About six weeks in the past, 47% of economists working for companies anticipated a recession by the top of the 12 months, which is fairly excessive. And staff’ confidence can also be low. Staff’ estimation that they might discover a job in three months in the event that they misplaced their place right this moment fell from 58% in Could 2022 to 55% in April 2023.

There was an excellent second for staff negotiating higher pay and dealing situations just a few months in the past. As we speak I counsel new graduates to focus on how they will resolve the issues going through a potential employer reasonably than anticipating employers to need to resolve theirs.