of job growth combined with the ramp-up of interest rates by the Federal Reserve led to an inevitable cooling of the labor market, with decreasing job growth beginning in the second quarter of 2024. Average monthly job gains were 147,333 in the second quarter compared to 267,333 in the first quarter. The cooling of the labor market, combined with the significant drop in inflation, contributed to the Federal Reserve cutting interest rates in 2024.
One Month Net Change in Employment and Total Annual Change (in thousands) January 2020–October 2024 (Source: U.S. Bureau of Labor Statistics)
Year Total 2020 253 264 -1411 -20477 2619 4615 1585 1534 1046 673 268 -243 -9274 2021 398 527 831 319 451 778 939 465 480 860 631 566 7245 2022 251 862 494 272 286 420 690 243 255 361 258 136 4528 2023 482 287 146 278 303 240 184 210 246 165 182 290 3013 2024 256 236 310 108 216 118 144 78 223(P) 12(P) 1701 P = preliminary Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Although the labor market has cooled, the job monthly job gains continued through the third quarter. The preliminary estimate for October job gains was only 12,000; however, employment in several states was adversely affected by severe weather, including catastrophic hurricanes. Job growth has enjoyed an impressive run. As of October, job gains were recorded in 46 consecutive months. An adequate labor supply is crucial to economic growth. Balance in the labor market, between the demand for labor and labor supply, is crucial for real wages to increase at a rate that does not contribute to inflation. In 2024 that balance returned, and is demonstrated by the chart below which shows the number of unemployed persons per job opening since January 2010. In August 2024 the rate approached 1.0, meaning that there was one job opening for every unemployed person. The rate had doubled since a low of 0.5 in the second quarter of 2022 when there were two job openings for every unemployed person. The cooling of the labor market in 2024 and consequently lower real wage growth was critical to the Federal Reserve’s decision to cut interest rates. Since February 2023 real wages have increased with wage growth exceeding inflation. However, the 3-month moving average of median hourly wage growth was 4.7% in September 2024, down from a high of 6.4% in March 2023, another sign of a cooling labor market. The decrease in real wage growth reduces inflationary pressures from the labor market.
Number of Unemployed Persons per Job Opening January 2010–September 2024 (Source: U.S. Bureau of Labor Statistics)
Central Wisconsin Report - Fall 2024
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