The job market in the United States is showing signs of weakness, according to Danielle DiMartino Booth, a seasoned forecaster and founder of QI Research. She has highlighted several key indicators that suggest the economy may be headed for a hard landing. One concerning trend is the increasing number of workers who are rolling off 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 prolonged unemployment duration is a red flag that the job market is struggling to provide opportunities for workers.
Another troubling sign is the surge in part-time employment in the US. The number of workers who typically work part-time reached a record high of 28.2 million in August, the highest level since the government began tracking this data in the 1960s. Booth attributes this increase in part-time jobs to the gig economy, where out-of-work Americans turn to platforms like Uber and other services to make ends meet. While these part-time jobs may provide some income, they are often less stable and secure than full-time positions, indicating that the overall hiring picture may not be as strong as it seems.
The weakness in the job market could have broader implications for the economy, particularly in terms of consumer spending. Booth predicts that if consumers start to pull back on their spending, it could tip the US into a downturn. Federal Reserve economists are already monitoring consumer spending closely, with consumption either falling or remaining flat in most Fed Districts, according to the central bank’s latest Beige Book. Lower consumption could have a ripple effect on key industries, such as manufacturing and housing, which have already been showing signs of weakness.
The manufacturing sector has contracted for 21 out of the last 22 months, according to the Institute of Supply Management, while inventory levels have grown. Additionally, the housing market has seen a decline in existing home sales, further indicating a slowdown in economic activity. These trends suggest that the economy may be losing momentum, with potential consequences for investors and businesses alike.
Looking ahead, Booth warns that investors may see more signs of economic weakening in the next quarter’s GDP figures. While the economy is expected to have grown nearly 3% in the last quarter, according to the latest Atlanta Fed GDPNow reading, there is a possibility that these figures could be revised down. Booth points to a recent revision that showed the economy added nearly a million fewer jobs than expected in the year leading up to March 2024, underscoring the fragility of the current economic environment.
Despite Wall Street’s optimism about a soft landing, Booth has been sounding the alarm about a potential recession for months. She has argued that the US economy may already be in a recession, despite continuing to grow in recent years. By highlighting the ongoing weakness in the job market and other key indicators, Booth is urging caution and preparedness for a possible economic downturn in the near future.
