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CNN
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America’s top central banker recently said the labor market now looks like it did before the Covid-19 pandemic drastically upended society. But that claim may not be exactly right, according to ZipRecruiter’s chief economist.
“Overall, a broad set of indicators suggests that conditions in the labor market are back to where they were on the eve of the pandemic, relatively tight but not overheated,” Federal Reserve Chairman Jerome Powell said at a press conference on Wednesday after the conference. central. the bank signaled that it plans to cut interest rates only once this year.
The Fed chief said the labor market had come to “a better balance” in recent years after the central bank aggressively raised rates from near zero starting in March 2022, which is in line with what official government statistics show . The ratio of open jobs with the number of unemployed job seekers, a measure Powell often cites to illustrate the tightness of the labor market, is now 1.2 to 1, down from 2 to 1 in the spring of 2022.
Workers’ filings for unemployment benefits fell to a 53-year low in 2022, reflecting a typically tight labor market, but claims have trended upward since then and are now back to roughly levels seen five years ago. pandemic. The rate at which Americans are leaving their jobs has also returned to pre-pandemic levels.
It’s true that today’s U.S. labor market is moving at a slower pace than it did immediately after the pandemic, when the economy made a stunning comeback from a brief recession in 2020. Powell said it’s just a matter of a ” the continued unraveling of pandemic-related distortions in both supply and demand.”
However, the job market of 2024 differs from 2019 in several key ways. And these factors may not change anytime soon.
Before Bell spoke with Julia Pollak, chief economist at employment site ZipRecruiter, about her views on the job market.
(This interview has been edited for length and clarity.)
Before the bell: Do you agree with Chairman Powell’s view that today’s labor market has returned to a pre-pandemic normal?
Julia Pollack: No, I would say that this is not quite normal. It’s a new normal, and there are some key differences. We are still adding employees sooner than 2019. But underneath the surface, the job market is different in that it’s slower, so the amount of inflows, dynamism, hiring, firing, everything is slower.
Companies are slower to fire them, they are also slower to hire, and workers are slower to change jobs. Now, is that necessarily a bad thing? It is not clear.
Why is the job market slower now?
High interest rates [currently at a 23-year high] they are holding back investment and causing businesses to take a kind of wait-and-see approach that is discouraging risk-taking. They are not hiring new graduates at the same rate, they seem quite reluctant to do so. It is a slower and more stable economy, partly due to risk aversion in the face of high interest rates.
The lower quit rate also suggests that there are fewer better alternatives for people than their current jobs. People are eager to continue their work that gives them flexibility. I think companies did a lot of soul-searching during and after the pandemic amid labor shortages to significantly improve compensation, benefits, and working conditions, and that may have also reduced attrition.
Unlike 2019, there is more remote work and more flexible work. Remote and hybrid work is five times greater than it was before the pandemic. This is here to stay.
But what about this wide gap between job openings and the number of unemployed people looking for work?
I think there’s reason to believe that the job market is actually less tight now than it was in 2019. The number of job openings is higher than it was by about 15% or more, but job postings online are actually lower by ZipRecruiter’s count.
You see this kind of widening gap between openings and hires and departures and everything else within [the Job Openings and Labor Turnover Survey].
It seems like we are systematically counting more and more openings every year for some reason.
Investors are worried that France could face a financial crisis if the political center collapses in the upcoming parliamentary elections, leaving far-right populists in charge of the European Union’s second-largest economy, my colleague Olesya Dmitracova reports.
President Emmanuel Macron called snap elections a week ago after his party lost to the far-right in a vote for EU lawmakers, a shock move that rattled markets for French stocks and government bonds.
There has been widespread speculation since then that Rally National, the party of far-right doyenne Marine Le Pen, is poised to become the most powerful force in parliament, ousting Macron’s center bloc.
Such an outcome could make it more difficult to reduce France’s huge pile of government debt, equal to 110.6% of gross domestic product at the end of last year, and could even add to it. A sharply divided parliament would also struggle to reduce the budget deficit – the gap between government spending and tax revenue – which reached 5.5% of GDP last year.
Read more here.
Monday: Profits from Lennar and La-Z-Boy. Fed officials Patrick Harker and Lisa Cook give remarks. The New York Fed releases the Empire State Manufacturing Index for June.
Tuesday: The Reserve Bank of Australia announces its latest interest rate decision. The US Commerce Department releases May’s retail sales figures and reports business inventories in April. The Federal Reserve publishes May data on industrial production. Fed officials Tom Barkin, Susan Collins, Adriana Kugler, Lorie Logan, Alberto Musalem and Austan Goolsbee delivered remarks. Japan releases May data on trade flows.
Wednesday: The National Association of Home Builders releases the NAHB/Wells Fargo Housing Market Index for June.
Thursday: Earnings from Accenture, Kroger, Darden Restaurants, Jabil and Conn’s. The Bank of England announces its latest interest rate decision. The US Commerce Department releases May data on housing starts and building permits and reports separately on the current account deficit in the first quarter. The US Department of Labor reports on the number of new jobless claims for the week ending June 15. The Philadelphia Fed releases its Manufacturing Index for June. Richmond Fed President Tom Barkin delivers comments.
Friday: Profits from CarMax. S&P Global releases June business surveys that assess economic activity in the US manufacturing and service sectors. The National Association of Realtors reports existing home sales in May.
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