Job losses expected in 2023-2024, warns economist
According to senior economist Selcuk Eren at The Conference Board, the Employment Trends Index declined slightly in March to a reading of 116.24 from February’s downwardly revised reading of 116.75. While specific industries are experiencing job losses, the overall economy continues to add jobs in areas where labor shortages remain, and wage growth remains above its pre-pandemic rate.
However, Eren noted that the Federal Reserve is expected to raise interest rates twice by 25 basis points each to control wage growth and inflation, which could trigger job losses and increased unemployment in the second half of 2023 and early 2024.
The labor market is still tight, although it has cooled down somewhat from a year ago. On the demand side, the job openings rate is still above the pre-pandemic trend but declining. On the supply side, the labor force continues to grow and reached 166.7 million in March due to rising labor force participation and a rebound in immigration to its long-term trend.
The decrease in the Employment Trends Index in March was driven by negative contributions from five of the eight components, including the ratio of involuntarily part-time to all part-time workers, the number of employees hired by the temporary-help industry, industrial production, initial claims for unemployment insurance, and job openings.
The Employment Trends Index is an aggregate of eight leading indicators of employment; when the index increases, employment is likely to grow, and vice versa.
