For the second consecutive month, US job openings fell more than expected, leaving the door open to some version of a soft landing for the world’s largest economy.
There were 9.59 million openings on the last business day of March, the BLS said Tuesday. That was down 384,000 from an upwardly revised 9.97 million on the last business day of February. Consensus expected 9.7 million from March’s headline JOLTS print.
Over the past three months, openings have fallen by 1.644 million, and are the lowest since April of 2021. Still, the situation looks nothing like “normal.”
Hires were unchanged, closing the gap further.
Layoffs are running at the briskest YTD pace since 2009, and after a recent round of revisions, jobless claims have inflected higher. And yet, generally speaking, demand outstrips supply across the economy, frustrating the Fed’s efforts to restore price stability. Wage growth is still running well above levels seen as consistent with 2% CPI, and last week’s update on the employment cost index underscored the point.
The JOLTS figures showed layoffs and discharges increased by a quarter million in March to 1.8 million, the most since December of 2020. Unlike the headline openings print, 1.8 million does count as a semblance of normal.
Even so, quits remained elevated. 3.85 million Americans voluntarily separated themselves in March. That was the fewest in two years, but still suggests a high level of churn amid elevated pay opportunities for job switchers.
The quit rate was 2.5%, down a tick from February, but historically high.
As for the Fed’s “favored” gauge of progress, the ratio of openings to Americans officially counted as unemployed fell to 1.61 using last month’s figure for the denominator. That’s the lowest since October of 2021.
This has been, and still is, an openings story. Employment as a percentage of the labor force is largely unchanged. It was openings as a percentage of the labor force which drove the overheating, as the figure above makes clear.
All in all, the JOLTS report did suggest the labor market is continuing along the path to normalization. The problem: It’s a winding, circuitous path, and the longer it takes to navigate, the more time inflation has to become entrenched on the services side of the economy.
That’s untenable because eventually, elevated price growth will embed itself in consumer expectations and psychology. At that point, the battle is lost, and so is the war.
But, again, Tuesday’s data was another step towards normal, and for that I suppose we should be grateful, particularly if every job opening eliminated equates to one actual job not lost.
Services, jobs, openings, inflation – all lagging indicators. The economy is slowing down folks. Throw in a regional banking crack (won’t say crash but it is bad) with deposits fleeing and the shorts picking out new targets based on CRE lending now, and you don’t need to be a genius to see that a soft landing would at this point be pure unadulterated luck. Wait until the owners equivalent rent hits the inflation stats in May or June. You won’t have to hear all the so called experts flapping their gums about the Fed needing to tighten more to fight inflation anymore.
This is a real question (i.e., not rhetorical): Are you honestly still unwilling to concede that the economists you’re so angry at for being right were, in fact, right? I mean, it’s hard for me to understand how your version of history works at this point. You implicitly pretend that every above-target inflation print is the first one. The “experts” you deride, week in and week out, were unequivocally right. Unequivocally. When I said, in February 2022, that the Fed needed to start hiking aggressively, you said something to the effect of “Whoa! Where did that come from?” Now, 15 months later, you’re still saying some version of the same thing, as if 2022 didn’t happen — as if inflation in America didn’t nearly rise into the double-digits. As if it’s not still a mile above target. As if there’s been any progress on core services ex-housing (there hasn’t).
This debate is settled. It’s over. Whether or not inflation falls from here, the “so-called experts” on TV (the people you don’t like, because you didn’t agree with them in 2021) were correct. The “experts” currently working at the Fed (the people you do like, because you did agree them in 2021) were disastrously wrong. That’s how history will remember 2021. 2021 will go down as one of the single worst macro economic policy failures in American history. We sent out a bunch of money, we kept perpetuating a Ponzi scheme (QE) and we lost control of inflation. Period.
What happens next is another, new chapter. It’s not an opportunity for people who were wrong to be “proven” right. A buzzcut at the barber was $13 in 2019. It’s $20 in 2023. If it stays at $20 in 2024, or only goes up to $22, that doesn’t mean inflation was transitory.
Shelter inflation should eventually slow, if not go negative, but shelter is a much smaller part of the core PCE inflation measure than of core CPI (about 18% vs 40%).
https://www.fanniemae.com/research-and-insights/publications/housing-insights-housing-poised-become-strong-driver-inflation
There is a clear trend now, it favors inflation coming down. Perhaps this along with the collapse in M2 and the tightening of financial conditions resulting from ongoing bank “failures” will combine with the slowing growth environment to tame inflation in H2. I know you point out the risk of wage growth cementing itself and leading to a psychological shift were inflation expectations take root, but I’m personally less concerned about that, little sticks to the psychology of the US population and consumer these days, I think we would need persistent inflation of not just services but goods for much longer for a wage spiral of consequence to materialize. The good news is we’ll likely find out soon, if bank runs and leading indicators are foretelling an accurate tell we might start worrying about job numbers for different reasons.