The Good And Bad News Behind America’s Jobs Puzzle

Layoff announcements continue to pile up across the US economy. Over the last 24 hours alone, Disney announced plans to eliminate 7,000 positions, reports indicated JPMorgan cut hundreds of mortgage-related jobs in recent days and the CEO of GitLab on Thursday cited "tough" macro conditions for a decision to reduce headcount by 7%. My cynical take from "What's Really Behind The Tech Layoffs?" aside, many of these moves do generally make sense, both in the context of a hopelessly ambiguous econ

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10 thoughts on “The Good And Bad News Behind America’s Jobs Puzzle

  1. There are several things going on. First many employers are hoarding labor since it was until very recently difficult to hire. Second, job cut announcements often take up to a year for actual severance to take place. And as you point out, many employees cut can go out and find a new position fairly quickly as there are still many openings, at least for now. So you have a lot of churn, which is not really that bad a situation to find for an economy. The problem is that as demand for domestic goods slow (not tech- everything else) and as time goes on, opening start to decline and layoffs start to hit in force and more job cuts come down the pike. It is at that inflection point that unemployment really goes up and one finds a self reinforcing loop (not a good loop). We are not there yet and we might not get there if the timing works out for the economy. That would be a so-called soft landing. It would be very lucky. What is more likely to happen is that we get a sudden stop from a credit or maybe another exogenous shock. That gets you a “hard landing”. Even more worrisome at that point is that with a GOP House, you will not likely see fiscal stimulus. We will be back to the Fed to cut rates, and frankly I am not sure that at this point cutting rates and ending QT will be enough to prod things along quickly. We could be stuck in subpar growth or recession for awhile. That is my fear.

  2. Your brief allusion to the disparity between headline payrolls and full-time employment is worth noting.

    Yesterday there was a piece on Marketwatch (“No wonder Powell didn’t commit to extra hikes”). In almost a throw-away at the end, they noted that “The household report also suggests that nearly all the jobs created over the last year are part time.”

    If that is correct, it would explain a lot, no?

  3. There are layoffs, but also 1.1M jobs added over past 3months, with hiring ramping up in January. This is not surprising with rent moratoriums scheduled to expire in March, 2023. Between that and the lack of any fiscal stimulus payments- it is not surprising that people are now looking to go back to work. The US workers in the lowest 20% of the income bracket earn, on average, about $4,900 of earned income and receive about $45,000 of transfer payments.
    A relatively small federal policy shift can easily result in a meaningful increase or decrease to the work force, especially for lower paying, unskilled service jobs.

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