Business is booming.

Today’s Jobs Report Signals A Weaker Economy

Today’s jobs report may give the Fed another reason to pause on interest rate hikes and another reason new graduates should not burst into the interview room asking for a big raise and remote work.

Workers may have a harder time getting the pay and perks they saw just last year. Worker power may be down.

The unemployment rate increased from 3.4% to 3.7%. But we need more signals than that to conclude the economy is weakening.

After all the unemployment rate is a lagging indicator –indicating the supply and demand of workers several months ago. (Remember the Great Recession started in December 2007 but the unemployment rate continued to fall until February 2008 as the recession was in full swing.)

Other signals point to a weaker economy: permanent layoffs are a higher share of the unemployed — 48.9% in May, which is a 7 percentage points increase from a year ago. And, former White House economist Betsey Stevenson notes that households report big job losses and employers report job gains —another sign of weaker numbers.

Older People Still “Retired” Signals A Weakening Economy

Owen Davis points out a persistently high share of people ages 55-64 saying they are retired. Before the pandemic the share who reported being retired in that age group was between 16-17%; now it is between 17-18%. We know that older people are more likely to be pushed out of the labor force so being retired may be a more socially acceptable way to say, “I was, urgh, laid off and can’t find another job.” The fact this group of experienced workers are not going back into the labor force, shows a softer demand for workers.

Falling Worker Confidence Signals a Weakening Economy

Worker confidence is falling significantly from last year; on May 31 the JOLTS numbers showed worker confidence falling significantly from last year; quit rates fell to 2.4% way down from last year’s, April 2022, quits rate of 3.0%.

In today’s BLS report a similar indicator of low worker confidence, the BLS “job leavers” share of total unemployed, shows continued softness. The share fell sharply to 12.6% compared to April’s rate of 13.3% and way down from a high of 15.3% in January 2022.

Real Wage Declines Signals a Weaker Economy

Firms are raising prices faster than they are raising wages. A worker may see a wage hike on paper but higher prices are eroding their buying power. Average weekly earnings for all private sector workers in May were $1,146.99 per week, up from $1,109.28 from a year ago, but to keep up with inflation workers needed about $17 more.

Inverted Yield Curve Signals a Weaker Economy

Another sign a recession may be underway is an inverted yield curve — the spread between 10-Year Treasury Constant Maturity and 2-Year Treasury Constant Maturity bonds adjusted for inflation. The negative yield curve points to a recession.


About 6 weeks ago almost half, 47%, of economists working for corporations expected a recession by the end of the year, which is pretty high. And worker’s confidence is also low. Workers’ estimation they could find a job in three months if they lost their job today fell from 58% in May of last year to 55% in April 2023.

There was a glorious moment for workers negotiating better pay and working conditions on their own a few months ago. Today I advise new graduates to concentrate on how they can solve the problems facing a prospective employer, rather than expecting employers to want to solve theirs.

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