No recession—resilient job market

Ben Casselman and Jeanna Smialek, "Could the Recession in the Distance Be Just a Mirage?," New York Times, 7-19-2023, https://www.nytimes.com/2023/07/19/business/economy/economy-soft-landing.html?name=styln-fed-day®ion=TOP_BANNER&block=storyline_menu_recirc&action=click&pgtype=LegacyCollection&variant=undefined-- 嘉玮

The job market has been resilient.

The second reason for optimism has been the gradual cooling of the labor market from a rolling boil to a strong simmer.

The rapid reopening of the economy in 2021 led to a huge imbalance between supply and demand: Restaurants, hotels, airlines and other businesses suddenly had hundreds of thousand of jobs to fill and not enough people to fill them. For workers, it was a rare moment of leverage, resulting in the fastest wage growth in decades. But economists worried that those rapid gains could make it hard to get inflation under control.

In recent months, however, the frenzy has subsided. Employers are not posting as many openings. Employees are not hopping from job to job as freely in search of higher pay. At the same time, millions of workers have joined or rejoined the work force, helping to ease the labor shortage.

So far, however, that easing has happened without a significant increase in unemployment. The jobless rate is roughly where it was in the strong labor market that preceded the pandemic. Some industries, such as tech and finance, have laid off employees, but most of those workers have found other jobs relatively quickly.

“Labor market overheating is diminishing substantially, to levels where it’s no longer so worrisome,” said Jan Hatzius, chief economist for Goldman Sachs.

Mr. Hatzius, who has long been more optimistic about the prospects for a soft landing than many of his peers on Wall Street, on Monday lowered his estimated probability of a recession to 20 percent from 25 percent. He said the recent progress in inflation and the labor market — as well as in consumer spending and other areas — suggested that the economy was gradually moving past the disruptions of the past few years.