With national unemployment at 3.6% and a total Civilian Labor Force of 167 million workers (see chart on page 13), you might logically infer that approximately 6 million workers are looking for work or are in transition. But according to the U.S. Bureau of Labor Statistics, there are an estimated 9.8 million job openings (see chart on page 12). Consistent with our comments in last quarter’s Barometer, there simply aren’t enough workers to fill the number of open jobs in the United States, and we know the gap is even wider for professional-level roles and roles that require a specific knowledge set or skill. Inflation Rate and Growth of Wages From the second quarter of 2021 through this quarter, the inflation rate has outpaced the growth of wages. Understandably, it has been challenging for companies and hiring managers to wrap their heads around the increase in compensation costs associated with talent and labor. But as the chart on page 14 shows, trailing 12-month wage increases have now exceeded inflation rates. Absent other outside circumstances, this should relieve some of the upward wage pressure on employers moving forward due to the inflationary trends. As of June 2023, the trailing 12-month change in the Consumer Price Index (inflation rate) is down substantially to 3%. This was the smallest 12-month increase since the period ending March 2021. As this rate approaches the Federal Reserve’s target inflation rate of 2%, markets are hopeful that the Fed will pause further tightening. Talk of Recession The threat of a recession has received a lot of media attention over the past year. But with inflation appearing to come under control and unemployment still near record lows, there is a lot of hope (and media speculation) that we may be headed for a soft landing — a return to acceptable inflation without a large rise in unemployment. It is true that the yield curve remains inverted (see chart on page 15), which is a leading predictor of recession in the
7 ARG Quarterly Barometer Q3 2023
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