What To Expect As Economists Worry Recession May Be ‘just Underway’

What To Expect As Economists Worry Recession May Be 'just Underway'

Top Line

As waves of layoffs sweep through the long-booming labor market, the Labor Department’s jobs report is expected to show a continued slowdown in employment on Friday — adding to several signs this week that the economy is slowing more quickly than believed. could cool further than expected, potentially risking the hard landing Federal Reserve officials have long tried to avoid.

important facts

On average, economists expect total employment to have increased by 238,000 in March – less than the 311,000 new jobs created in February and potentially the lowest monthly gain since April 2021.

The unemployment rate is expected to hold steady at 3.6% after unexpectedly ticking up last month from a 54-year low of 3.4% in January, despite rising reports of corporate layoffs at the nation’s biggest employers.

The latest report comes after the Labor Department revised its latest data on jobless claims on Thursday, showing that Americans filed an additional 142,000 first-time jobless claims over the past three weeks — up 24 from previously reported levels. % were higher.

“For the first time in a long time, the risks are two-sided [the upcoming] Tom Esse, founder of the Sevens Report, says the higher-than-expected figures may indicate that the Federal Reserve may need to continue slowing the economy to help reduce inflation by raising interest rates, while some Even a drop could add to concerns about an impending recession. ,

Those recession concerns have intensified this week, says Essaye, with “every major data point” — including jobless claims, manufacturing activity and construction spending — showing the economy is slowing and giving some experts reason to worry. It can slow down very quickly.

“More likely than not, a recession is underway now,” Bill Adams, chief economist at Comerica Bank, said in a morning note, noting that updated Labor Department data means that sustained jobless claims growth over the past six months have been roughly as high as As big as the Great Depression of the 1970s.

what to watch

The Labor Department’s jobs report for March will be released on Friday at 8:30 a.m. ET.

main background

The unemployment rate unexpectedly rose in February despite the labor market gaining significantly more jobs than expected, amid waves of layoffs at some of the nation’s largest tech employers. Over the past month, layoffs have spread to other industries, with retail giant Walmart and fast-food chain McDonald’s cutting hundreds of jobs. On Thursday, outplacement firm Challenger, Gray & Christmas reported that employers have cut nearly 270,400 jobs so far this year — a 396% jump from the same period in 2022.

important quotes

“The rising trend in claims has been an important missing part of the labor market story, but it is now clear that layoffs are on the rise,” Ian Shepherdson, chief economist at Pantheon Macro, said in a Thursday note. “These data alone will not prevent the Fed from raising rates again in May, but they are a warning sign that should not be ignored.”

Further reading

‘The economy is unhealthy’: Job growth unexpectedly slows as employers scale back wages (Forbes)

Job cuts soar nearly 400% this year as jobless claims surge (Forbes)

2023 Layoffs Tracker: Walmart to cut 2,000 employees (Forbes)

Leave a Reply

Your email address will not be published. Required fields are marked *