August JOLTS Report Points to Continued Cooling
August JOLTS Report Points to Continued Cooling
The labor market has been cooling for more than two years. Initially, the slowdown signaled normalization from the post-pandemic rehiring frenzy and Great Resignation. But when the labor market returned to pre-pandemic conditions and kept cooling, labor market observers began to voice concerns about the damage restrictive monetary policy could wreak if sustained for too long. Now that the Fed has started cutting interest rates, the key question is: When will the labor market level off and rebound?
The highly unsatisfying economist-speak answer is that monetary policy operates with long and variable lags. In other words, we don’t know. Cuts in the federal funds rate will be reflected in interest rates for real estate, commercial, and consumer loans at different times, and activity will recover at different rates in different markets.
Venture capital funding and private equity would likely recover more quickly than the mortgage refinance market, given that most Americans now hold long-term mortgages with low interest rates, and it will take significant cuts before a substantial share of mortgages are “in the money.”
While recovery would start in different industries at different times, a labor market rebound would probably begin with an uptick in job openings and stabilization in hires and quits rates followed by their return to a gradual growth. In today’s JOLTS report, we got the former but not the latter, so the overall picture is unchanged: For now, the labor market is still cooling.
Take a tour through the rest of the JOLTS report in ZipRecruiter charts.
