New data shows the job market could finally be slowing down. In June, there were 10.7 million job openings in the U.S. While this figure still remains near historic highs, it marks a sharp drop from the 11.3 million openings in May.
Joe Brusuelas, Chief Economist RSM US LLP joined Cheddar News to discuss.


Opening Bell

New Data Shows Signs of Cooling in U.S. Labor Market

for more insight on this is bringing joe brusuelas, chief economist at R. S. M. U. S. L. L. P. Joe. The recent jobs report saw a job opening drop around 600,000 to just over 10 million in june. We also got jobless claims out this morning slightly elevated up six K over what we saw the previous week. But even the four week average that moved up around 6000. Do you take this collectively as a potential sign that the red hot labor market may start to be cooling down? Well, it is cooling, but the labor-market remains very tight. You know, when you look at that jolts data and you can you estimate how many unemployed workers are there per job? There's still 1.81 jobs per worker. Right? So the market is very, very tight. Now, what's happening is we're going to see a cooling and hiring through the remainder of the year. You know, the last three months we've we've averaged about 375,000 jobs generated per month. I expect that to slow to around 100 and 50 per month by the end of the year. And what's driving that is we have some real demographic issues in the country simply simply put, we don't have enough native born workers to fill the jobs. And because we're at an impasse on immigration policy, what's happening is is that we're simply just going to see a slowdown in hiring on top of the Federal Reserve engineering its rate hike campaign as it seeks to reestablish price stability. I was actually gonna ask you what's driving um you know the slowdown that we're seeing. But you answer that. So I'll ask you this hiring, you know, slow during the month, dropping 2%, just over six million. We're also starting to hear more and more about layoffs Walmart, we just talked about that a moment ago and then these hiring freezes that we're seeing more broadly all along the fear of an economic slowdown that some say we are already in, others debating whether that's the case in terms of a recession. But if the U. S. Sinks into a deep recession or deeper recession or just a recession, how much worse do you think things could get? You know, could we see hiring plummet and at what rate are we talking? Okay, so on friday we're expecting a slowdown to around 225,000. That's nowhere near recession. As a matter of fact, the labor market really is signaling us isn't in a recession right? It's the last line of defense for those who are like myself who are saying, well, we're not quite meeting that formal definition of recession yet. The economy is slowing and you should expect to see hiring slow again to around 100 and 50,000 by the end of the year. Now, my sense is when we get into 20, and 2024. What's interesting is in order to stabilize the unemployment rate at around the full employment rate, which I think is around 4.4%. You only need to generate around 60,000 jobs per month. So when you talk with individuals who are investors or policymakers or economists like myself and they tell you this is the most peculiar slowdown and one of the more interesting times of the us economy, it's very true. But at the end of the day, those demographics The fact that we're only adding around one half of 1% to the labor force. Now as opposed to the 1% we did for many decades, the numbers that we attached to what's good, what's strong, what's week or what's robust those are going to change. But for now the economy is adding more than 200,000 jobs a month. That's very strong. You know, I certainly do agree agree to the data that we have right now shows a slight slowdown and nothing, you know, dramatic. But the reality is when we look at labor data for the most part, they're lagging indicators. I mean you look at the jobs report that's by at least a month, you know, behind um and then you have other data that's even further lagging. So in context, the lagging indicators, you know, what's your thought process that something in the undercurrent is happening more than what we see in the data. Well what's happening is inflation. So if you're in a down market household or at the lower end of the middle class, it feels like a recession because for you it is you had a loss in purchasing power and you're living standards actually declining in real time. Now, up market the upper end of the middle class and the two upper quintile of income earners, there's just sort of shrugging off the higher price is. Now, I know for your your your audience out there who are primarily investing fixed income, you know, equities, currencies, commodities, it really is a tough time that has more to do with the decline in liquidity and the feds price stability campaign. So when we look at the economy, I look at the 13 week moving average of initial claims and it's trailing the top line that tells me higher and slowly. And the economy is too joe, I'm gonna have to leave it there. We're coming up against the clock. The opening bell's about to ring in a few minutes, joe brusuelas, Chief economist. R S M U S L L PP