Jeffrey Sparshott and Gabriel T. Rubin of The Wall Street Journal are reporting that forecasters expect unemployment to edge higher and hiring to slow in 2024. They write:
Employers slowed hiring and handed out smaller raises in recent months, signs of fading momentum in the job market that have some forecasters expecting unemployment to rise in 2024.
And that might be OK. The key for American workers and Federal Reserve policymakers is to have the labor market cool without collapsing. That would support household incomes while helping inflation drift lower, putting the economy on a glide path to a soft landing—as long as the slowdown isn’t too severe.
“You can see these small cracks forming” in the labor market, said Michael Pugliese, a senior economist at Wells Fargo. “That should give you reason for pause going into 2024.” […]
Still, there are reasons for optimism. The labor market has cooled, but as of November, it was still producing jobs at a faster pace than it was just before the pandemic. Consumer spending has proven resilient, propelling demand for an array of goods and services—and the people who produce them. And companies, broadly, have been reluctant to lay off workers after they so recently struggled to find and keep them.
“Unemployment is unlikely to increase dramatically as companies shy away from firing workers,” Ellen Zentner, chief U.S. economist at Morgan Stanley, said in a research note. “Labor shortages and the high turnover costs over the past several years mean firms are hesitant to let their workers go even as economic growth slows.”
Read more here.
