(Boston, MA) March 10, 2023 – The Bureau of Labor Statistics Employment Situation Report showed a gain of 311,000 jobs in January, a result that not only raises the stakes for next week’s inflation report but also suggests that the US is in a fundamentally different labor market. Our economists broke down the jobs report this morning on LinkedIn Live.
Demographic shifts, and shifts in the nature of work itself, mean that the traditional methods of slowing down the economy and controlling inflation may not have the same impact as in the past.
“There are fewer unemployed people now than last year at this same time despite adding 2.5 million more people into our labor force. There’s still a huge amount of opportunity and we’re still seeing a lot of help wanted signs. People are saying we’re going to have a recession but it’s harder to see the data that supports that. A lot of uncertainty is because people are used to Fed actions having certain effects in the past, but we’re not in the past,” said Lightcast Senior Economist Ron Hetrick.
Key Takeaways:
1. The industries that are usually sensitive to higher interest rates, like construction and real estate, all saw gains. A reason for this is that consumer spending is shifting from goods to services, rather than slowing down.
“These are sectors we expect to fall off a cliff here, and we’re not seeing it,” said Lightcast Senior Economist Elizabeth Crofoot.
2. One-third of all the employment gains have been in service industries, previously hard hit by labor shortages. Restaurants and hotels have had consecutive monthly gains for more than two years now. Increased immigration and continued consumer spending are both having an impact in these lower-wage roles.
“As long as consumer spending continues, it's hard to say we’re in a recession. If people are shifting their spending from one area to another, it’s likely we’re not going to see that happening,” said Lightcast Senior Economist Ron Hetrick.
3. This report shows how resilient the new labor market is, and how different the rules will be going forward. Labor shortages, different ways of working, and a fast pace of skills change are baked into the job market now.
“There have been so many structural changes, in demographics, in wage structure, in the move to hybrid work, that it’s really difficult to compare the labor market today to the labor market before the pandemic. It’s much more resilient. There’s a lot more momentum,” said Lightcast Senior Economist Elizabeth Crofoot.
Charts:
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