The U.S. economy is at a critical juncture. While the job market is rich with opportunities, prices are high due to historic inflation, and things are likely to get worse. According to the recent Labor Department JOLT Survey, data from February indicates the labor market is booming.
It shows that once again, a near record 11.3 million job openings are available. By contrast, the unemployment rate is just 6.3 million, meaning there’s almost twice as many jobs available as there are unemployed people.
And that 11.3 million is well above what it’s been in the past. Just before COVID, it was 7 million. And more traditionally, if you go back five years from there, it was about 5 million…huge amount of job openings…unprecedented. The report also cites three times as many people quitting their jobs than getting laid off.
(Here are five ways to keep employees happy.)
Yet for all the positive job market indicators, businesses are nervous. Research from survey firm Market sees business expectations for the next five months lower than mid-2021.
The reason for the skittishness? The consumer.
The University of Michigan and The Conference Board recently released surveys indicating forward-looking consumer confidence at its lowest level since The Great Recession. They cite high inflation as the chief culprit, with levels not seen since November 1981. Consumers fear their incomes won’t keep pace with inflation, undermining their spending power.
Making matters worse, we’re about to be hit by another, much larger inflation shock brought on by Ukraine War fallout and Russian sanctions. What began with oil market turmoil is spilling over into shortages in grains, fertilizer, nickel–a key ingredient in the production of stainless steel–and neon, which is required to manufacture solar panels and microchips. We learned from COVID shutdowns that production delays and supply chain bottlenecks can get messy and ultimately lead to higher inflation.
These levels will hit real income spending power, which is why businesses are getting nervous.