The number of job openings in the U.S. may have slipped slightly at the top of the year, but that does not necessarily mean the labor market has stabilized. Recently, the U.S. Department of Labor said job openings [in January] registered above 10.8 million, slightly higher than the 10.3 million some analysts had expected. Fortunately, this figure is down from the upwardly-revised 11.2 million positions reported in December, but it is still not enough to characterize the labor market as recovered.
The number of payroll vacancies in the U.S. has remained above 10 million for at least the last 20 consecutive months. For reference, unemployment in February 2020–at the start of the COVID-19 pandemic–was only 7.6 million. That was a record high then, meaning that today’s unemployment roster is roughly 40% higher, setting a new record in the process.
The pace by which unemployment has been easing–or not easing, as the case may be–is important because it is a metric the Federal Reserve watches carefully. Gauging the labor market properly is a reliable tool for the Fed, particularly regarding inflation. Unfortunately, when payroll demand outpaces available labor to this degree, the Fed will have to further contend with higher inflation for a little while longer.
Persistent inflation, of course, has been a common trait of post-pandemic America. In 2022 alone, the U.S. central bank logged seven consecutive interest rate hikes. Another one came just after the New Year, marking eight total since the beginning of 2022, and analysts fear more could be on the way.
Regardless of how many more interest rate hikes could come–and what those margins might be–their enduringly high value means consumers spend more on just about everything that matters. Higher core Fed interest rates translate to higher borrowing costs for consumers and higher costs for basic goods.
More importantly, elevated inflation levels also increase concerns of an economic recession, which could affect labor across the economy. A particularly sensitive balance suggests that job growth, consumer spending, and inflation will continue complicating the recovery effort.
