Labor market outlook: Layoffs will outpace hires by year’s end, says Economist

But the labor market has not seen a net loss of workers in any month this year. That’s largely because firms are still hesitant to let go of workers they’ve picked up in recent years, Rosenberg said, with some employers still reeling from the labor shortages they encountered in the early days of the pandemic. .

Those fears have kept layoffs and layoffs low, with employers instead cutting hours for employees or shifting full-time workers to part-time, Rosenberg added. The average work week fell to 34.2 hours in July, down from a peak of 35 hours during the pandemic, according to Federal Reserve data.

Rosenberg said it’s only a matter of time before there are more layoffs than hires.

“Or people will say, ‘Well, you know, it’s just one time.’ It’s just a data point.” Or, it’s going to make a lot of people start to realize that this recession was delayed, it was never derailed,” he said. “The only thing we know for sure is that the employment rate, the proxy for job demand, is falling sharply, and I don’t think that’s going to change anytime soon.”

Signs of weakness appeared in the official employment data. Unemployment rose to 4.3% in July, the highest unemployment rate since the pandemic. Meanwhile, the government last week reported a steep downward revision to job gains in the year to March 2024, with the economy adding 818,000 fewer jobs than previously thought, according to the Bureau of Labor Statistics.