Key Findings Media and economists can talk about a slowing economy, but employment and the job market need to be evaluated on their own terms. • Unemployment rates remain at historic lows, even with the Federal Reserve raising interest rates to cool inflation and no longer predicting a recession. This raises hope of a soft landing. • Nonfarm employment growth remains robust, and people continue to return to the job market as evidenced by the labor force participation rates seen in this report. • Surprising virtually everyone, inflation rates have dramatically dropped to 3% over the past 12 months. Just as this report was being pulled together, the Fed raised interest rates by 25 basis points. Many experts predict this will be the last adjustment for a while. Overall, this is very promising — inflation is down in conjunction with a cooling but still very robust labor market. • The trailing 12-month wage growth exceeds the inflation rate for the first time since early 2021. All things being equal, we would expect this to relieve some of the upward pressure on wages as we move into the second half of the year. • The sentiment regarding a pending and almost inevitable recession has shifted to a more positive view that we might escape a deep recession and may even experience a soft landing.
4 ARG Quarterly Barometer Q3 2023
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