The US economy is facing challenges in the labor market, as noted by Danielle DiMartino Booth, a veteran forecaster and founder of QI Research. She highlighted several key areas that indicate the economy may not be on solid footing, pointing to signs of weakness in the job market.
One concerning trend is the increasing number of workers who are rolling off their unemployment benefits without finding a new job. According to the Bureau of Labor Statistics, 21% of workers are now taking more than 27 weeks to secure employment, up 3% from the previous year. This suggests that the job market is becoming more difficult for many individuals, as they struggle to find new opportunities.
In addition, the number of part-time workers in the US has reached an all-time high, with 28.2 million employees usually working part-time as of August. This trend raises questions about the strength of the hiring landscape, as part-time work may not provide the stability or income that full-time positions offer. Many of these part-time jobs are attributed to the gig economy, where individuals turn to platforms like Uber to generate income.
Booth warned that weaknesses in the job market could eventually lead to consumer weakness, a significant concern for the overall economy. Fed economists have already noted weaker consumer spending, with consumption either falling or remaining flat in most Fed Districts. This could have ripple effects across various industries, impacting sectors such as manufacturing and housing.
The manufacturing sector has experienced contraction for 21 out of the last 22 months, while inventory levels have grown. The housing market has also seen a decline in existing home sales, indicating a slowdown in activity. These trends suggest that economic challenges are not limited to the labor market but are also affecting key sectors of the economy.
Looking ahead, investors may see more signs of economic weakening in the upcoming GDP figures. While the economy is expected to have grown nearly 3% in the last quarter, there is a possibility of downward revisions. Booth highlighted a recent revision that showed the economy added fewer jobs than initially expected, underscoring the uncertainty surrounding economic growth.
Despite Wall Street’s optimism for a soft landing, Booth has been warning of a recession for months. She has argued that the US economy may already be in a recession, citing ongoing weaknesses in the job market as a key indicator. As developments in the labor market continue to unfold, it remains to be seen how the economy will navigate these challenges and what impact they will have on overall growth.
