In the past, Chair Jerome Powell has said that slowing inflation back to the Fed’s 2% target will require “pain” in the labor market. It could make Fed officials more inclined to raise their key interest rate in November or December. With the economy growing steadily, businesses are likely more confident about adding positions. economy, analysts expect growth to top a healthy 3% annual rate for the July-September quarter. Because consumer spending drives about 70% of the U.S. People are less inclined to take the risk.”Ĭonsumers spent freely over the summer - on travel, hotels, movies and concert tickets - and lifted the economy in the process. “People would jump off, get these real meaty increases,” she said. Responses to their job listings are 80% higher than they were a year and a half ago, she said, with some of that increase likely a result of widespread layoffs last year by tech companies.Īnother change from a year ago, she noted, is that even workers with tech skills are less able to job-hop for large raises. Sarah Tilley, a senior vice president at the business software provider ServiceNow, is seeing evidence that more workers are available. And what we’ve seen is that workers do respond to a strong jobs market.” “After a downturn, there’s a lot of consternation about to what extent workers will come back. “We’ve seen a very impressive rebound in the labor supply,” said Sarah House, senior economist at Wells Fargo. Likewise, hospitals, child care centers and government agencies are still adding workers as they seek to rebuild their staffs after having lost workers during COVID. In September, for example, restaurants and bars added 61,000 positions, finally restoring their pre-pandemic levels of payrolls. This trend has lessened the labor shortages that many employers complained about since the recovery from the 2020 pandemic and enabled some companies to finally catch up to their previous employment levels. Immigration has also rebounded after COVID-era restrictions were lifted.Īs a result, more workers are available to fill millions of open positions. Others have likely been drawn in by financial stress they feel from higher prices. There are several likely reasons why: Millions of people have started job hunting in the past year, pulled into the job market by strong demand for workers and higher pay. Instead, hiring has rebounded with vigor. When employers added just 105,000 jobs in June, economists had expected further modest gains to come. The increases are intended to slow borrowing and spending by businesses and consumers, thereby cooling growth. The Fed has raised its benchmark short-term rate 11 times since last year to about 5.4%, the highest in 22 years - the fastest pace of rate hikes in four decades.
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