Is Employment Recovering?

Financial FAQs

 “The number of job openings increased to 7.6 million in April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and total separations decreased to 5.1 million and 5.0 million, respectively. Within separations, both quits (3.0 million) and layoffs and discharges (1.7 million) were little changed.” BLS.gov

FRED/jolts

The employment picture is improving, and there are prospects for more hiring ahead. The question is how long can it last with so much economic and geopolitical uncertainty?

The manufacturing boom is one reason for the employment surge because it’s building out our aging infrastructure, thanks to the Biden administration’s $1.2 trillion Infrastructure Investment and Jobs Act (IIJA). But manufacturing is growing also due to the binge in private investment for the AI build out of data centers I’ve been writing about—maybe as much as $2 trillion in mainly borrowed money.

Biden’s IIJA provides $550 billion in new funding to rebuild roads, bridges, public transit, water systems, and broadband access across the United States on top of $650 billion authorized by Congress for work on existing infrastructure, says Wikipedia.

The latest Institute For Supply Management survey reported:

“The Manufacturing PMI^® registered 54 percent in May, 1.3 percentage points higher than in April and its highest reading since May 2022 (55.9 percent). The overall economy continued in expansion for the 19th month in a row. (A Manufacturing PMI^® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) per Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee

The good news is also showing up in vastly improved jobs data. The April JOLTS report on job openings being advertised by employers jumped to 7.6 million from its low of 6.55 million last December.

There was just a 100,000 increase in hires (5.1 million) over separations (5 million), in the report, because employers remain cautious over the tariffs and Iran war. But it’s also a sign they are holding onto their existing employees.

Add to this payroll provider ADP reported that U.S. businesses created 122,000 new jobs in May to mark the biggest increase in 16 months. It’s another sign of a rebound in hiring in what’s been a tough labor market for job seekers.

“Hiring was more broad-based in May than we’ve seen in the last few years,” said Nela Richardson, chief economist at ADP, the U.S.’s largest processor of company payrolls. “The labor market continues to show sustained momentum going into the summer hiring season.”

So economic growth is holding up for now. Q1 was revised downward from an initial 2.0% to 1.6 %, due to slowing consumer spending. Second quarter growth estimates are in the 3% range, with the Atlanta Fed’s GDPNow estimate of second quarter growth at 3.0%.

But an unusually pessimistic result from the University of Michigan sentiment survey reports that inflation expectations are sky high, which will further slowdown spending as consumers become more careful with their money.

“Year-ahead inflation expectations inched up from 4.7% last month to 4.8% this month. The current reading substantially exceeds the 3.4% reading seen in February 2026 prior to the start of the Iran conflict, along with all 2024 readings. Long-run inflation expectations climbed from 3.5% in April to 3.9% in May, notably higher than the 2.8% to 3.2% range seen in 2024.”

So there are many caveats to future projections of the job market and a recovering manufacturing sector. The 2026 International Monetary Fund World Economic Outlook highlights how precarious this recovery is. Our economic wellbeing may depend on the duration of the Iran war, to no one’s surprise. If it lasts more than a few months, the likelihood of recession has increased

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

 

Immigrants Make a Difference

 Popular Economics Weekly

“Total nonfarm payroll employment increased by 139,000 in May, and the unemployment rate was unchanged at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in health care, leisure and hospitality, and social assistance. Federal government continued to lose jobs.” BLS

FREDnonfarmpayrolls

The above FRED graph is the best picture of where the jobs market has been headed over the past two years (May 23-May 25). It’s a slow downward trend that is averaging a monthly gain of 149,000 over the prior 12 months.

But since January 2025 and Donald Trump’s inauguration (last five bars in graph), job growth has averaged just 124,000 per month increases, and Trump’s anti-immigrant policies will continue to harm the job market and economic growth

It's becoming obvious that firms are hiring less because of rising uncertainty caused by the DOGE cuts and Trump’s tariffs. And don’t forget the immigration crackdown that is reducing the number of workers available for those jobs. The Trump administration has trumpeted the ‘removal’ of some 72,000 undocumented immigrants already, and intention to remove more than one million over the next year.

We know what that will do to our workforce. Some 625,000 working adults have dropped out of the adult workforce just in May, which means they stopped even looking for work.

So, it’s difficult to know if the immigration crackdown is causing more to simply stop working as well as the hiring slowdown. We know that immigrants, whether legal or undocumented, have become a major component of our job market with our declining population growth.

According to the Center for Migration Studies, a non-partisan think tank, an estimated 8.3 million unauthorized immigrants contribute to the economy, representing about 5% of all workers. This number has increased since 2019 but is like the 2007 figure. Lawful immigrants make up most of the immigrant workforce at 22.2 million, or 13% of all workers. Many work in construction (1.5 million) and restaurants (1 million), and fewer in Agriculture and farms.

Reducing the number of workers will hurt both our employment picture, as well as future growth, since if the normal one million plus annual influx of immigrants is reduced, it will impact GDP growth as well.

But in wanting so badly to feed red meat to his MAGA followers with the propaganda that immigrants are evil and criminals, employers cannot find the workers they need. There are still more than 7 million job vacancies, according to the Labor Department’s JOLTS report.

This didn’t have to happen, if Trump had allowed the bipartisan immigration bill to pass that Biden had negotiated, which gave a path to citizenship and allowed immigrants to obtain legal work permits.

But the Trump administration isn’t interested in economic growth as much as branding non-European whites as undesirables—even though our Hispanic population, mostly South and Central American, are of white European origin.

It's how autocrats stay in power. President Trump is dividing Americans in artificial ways—whether by economic class, or birth origins—any way he can think up to exacerbate the divisions.

And it will not only shrink the working population, but U.S. economic growth as well.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Still Many Job Openings!

 Financial FAQs

Calculated Risk Blog

It’s hard to reconcile the recent downgrade of US Treasury debt by Fitch Ratings, one of the three major debt rating agencies, to AA+ from AAA, with the US economy still at full employment.

“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” it said. “Several economic shocks” as well as tax cuts and new spending initiatives “have contributed to successive debt increases over the last decade,” reported MarketWatch on the downgrade.

The Bureau of Labor Statistics Job Opening and Labor Turnover Survey (JOLTS) reported an average of 5.9 million hires per month (blue line in graph), and total separations of 5.6 million, while the number of job openings has declined to 9.8 million range (black line).

That’s still a lot of job openings, mostly in government and services. Openings increased in health care and social assistance (+136,000) and in state and local government, excluding education (+62,000). Job openings decreased in transportation, warehousing, and utilities (-78,000), state and local government education (-29,000), and federal government (-21,000), said the Bureau of Labor Statistics press release.

Fitch maintained that “tighter” credit, weakening investment in business, and a “slowdown” in consumption “will push the U.S. economy into a mild recession” in the fourth quarter of this year and the first three months of next year, reported MarketWatch.

This is although most economists now see little danger of any recession at all; maybe just a ‘soft landing’ that slows economic growth once the Fed ends its interest rate hikes.

That doesn’t mean it hasn’t been a wild ride since the pandemic-induced disruptions.

The Calculated Risk graph tells the best tale of the pandemic—what our economy has endured from the effects of COVID-19. There were 13.406 million job layoffs and discharges in March 2020 (red bar spike in graph) during the nationwide shutdown when city streets emptied from the mandatory lock downs and home stays and wild animals roamed the streets.

It resulted in the shortest recession ever—just two months, April-May 2020—then economic growth suddenly reversed, and businesses hired 8 million workers (blue line) in the next couple of months.

The JOLTS report also tells us the difference between hires and total separations has averaged some 300,000 nonfarm payroll jobs, which approximates the average monthly job creations this year.

This is what Bidenomics is all about, the various aid programs and bills enacted by congress to modernize the US economy and reduce global warming. It has created something like six million jobs since President Biden took office, and maybe 3,600,000 more jobs this year.

It also tells us why the US economy continues to expand in all sectors—with consumers as well as in manufacturing. Consumers provided most of the 2.4 percent increase in Gross Domestic Product (GDP) in the ‘advance’ (first of three) estimates of second quarter economic growth.

This should confirm that no recession is imminent this year. Even if growth in Q3 and Q4 slowed, the overall year’s growth would still be positive.

Goldman Sachs chief economist, Jan Hatzius is one of the major economists who trimmed the probability of a recession in the next 12 months to 20 percent from 25 percent — well below the 54 percent median among forecasters who participated in the last Wall Street Journey survey.

“The main reason for our cut is that the recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession,” said Hatzius.

And as I reported earlier, Federal Reserve Chair Powell said the Fed Governors now believe we can avoid a recession at Wednesday’s post-FOMC meeting, after announcing raising the benchmark interest rate to a range of 5.25 percent to 5.5 percent, the highest level in 22 years, in order to combat “elevated” inflation.

Consumers also like the continued growth, according to the Conference Board’s July Confidence Index that jumped from 110.1 to 117.

“Consumer confidence rose in July 2023 to its highest level since July 2021, reflecting pops in both current conditions and expectations,” said Dana Peterson, Chief Economist at The Conference Board. “Headline confidence appears to have broken out of the sideways trend that prevailed for much of the last year. Greater confidence was evident across all age groups, and among both consumers earning incomes less than $50,000 and those making more than $100,000.”

We should wait for Friday’s latest official unemployment report for the most recent unemployment picture, but it looks like Fitch Ratings is an outlier on the soundness of the US economy.

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Economy Has Room to Expand

Financial FAQs

Calculated Risk

The latest Job Openings and Labor Turnover Survey (JOLTS) report showed that small businesses are hurting the most during this pandemic with even outdoor dining banned in some regions, such as Southern California, while new hires and job openings were basically unchanged in November.

The number of job openings was little changed at 6.5 million on the last business day of November, the U.S. Bureau of Labor Statistics reported today. Hires were little changed at 6.0 million (deep blue line on graph) while total separations increased to 5.4 million. Within separations, the quits rate (yellow line) was unchanged at 2.2 percent while the layoffs and discharges rate (red bar) increased to 1.4 percent.

It looks like most businesses are holding their breath over future plans until there is more certainty about COVID-19 outcomes. But even more will depend on what kind of legislation a Democratic congress will pass—including a higher minimum wage, expanding Obamacare with a public option, and a national reconstruction program that will begin to upgrade our badly obsolescent infrastructure and create millions of good-paying jobs.

Details include the fact that layoffs increased 295,000 to nearly 2.0 million in November. Hiring rose 67,000 to 5.979 million. The hiring rate was steady at 4.2 percent. A separate report showed a sharp decline in confidence among small businesses in December.  Hires increased in professional and business services (+175,000) and mining and logging (+13,000). Hires decreased in accommodation and food services (-73,000), other services (-67,000), and information (-43,000). The number of hires was little changed in all four regions as we said.

AppleMobility

What is still missing from this picture? Apple mobility tracks the number of Google map requests, with is a proxy for frequency of travel (except for regular commuters). It confirms people are traveling approximately 50 percent less, another so-called high frequency indicator of economic trends, which is why entertainment, leisure and hospitality jobs have declined as indicated in the most recent unemployment report.

Also, the NFIB Small Business Optimism Index declined 5.5 points in December to 95.9, falling below the average Index value since 1973 of 98. Nine of the 10 Index components declined and only one improved. Owners expecting better business conditions over the next six months declined 24 points to a net negative 16 percent, said the press release.

“This month’s drop in small business optimism is historically very large, and most of the decline was due to the outlook of sales and business conditions in 2021,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”

The beige-book report, prepared by the Federal Reserve on information collected by regional Fed banks on or before Jan. 4, showed modestly higher growth in most parts of the country but found that two districts reported no change in activity (St. Louis and Kansas City) while two noted a decline (New York and Philadelphia).

So there is no inherent reason business and consumer confidence might return to pre-pandemic levels once the vaccinations begin to reach the general population. Most economists predict a rebound by the beginning of fall when schools are scheduled to fully open again.  But it also means more national job-creating programs must be enacted by a Democratic administration that wants government to work for all Americans.

 Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen 

Where Are the Workers?

Popular Economics Weekly

The number of job openings rose to 7.5 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.7 million and 5.4 million, respectively.

But the miniscule change in hires and separations doesn’t tell us the real employment story. This Calculated Risk graph shows the huge separation between the yellow line (Job openings) and blue line (Hires). It’s now almost 2 million.

Calculatedriskblog

The actual difference was because job openings surged 4.8 percent in the month to 7.488 million at the same time that hires fell 0.6 percent to 5.660 million, according to Econoday. “The gap between the two stands at a new record of 1.828 million, signifying a huge demand for workers that isn’t being met.”

Year-on-year, openings are up 8.6 percent vs. only a 0.6 percent rise for hires. The gap between total openings in March relative to the 6.211 million unemployed actively looking for a job in the month was 1.277 million.

This tells us how complex is the hiring process, since it’s becoming ever more difficult to match those looking for work with the advertised job openings. How can we fix the problem from the mismatch?

One hint is we know from last week’s unemployment report almost 500,000 fewer workers were available for work in the Household Survey, shrinking the labor pool, even though job hirings were up in the seasonally adjusted Establishment Survey that reports actual payroll numbers.

I believe those either leaving the workforce, or still looking for work, are waiting for better job prospects. Most do not want Amazon warehouse or Walmart jobs that pay barely above minimum wages.

The largest hires in the April unemployment report were all in the services sector. Professional services, education and health services led, with Leisure/Hospitality and construction hiring next—all in the lower-paying service sector.

Only 4,000 manufacturing jobs were created, according to the BLS, with the utilities and mining sector losing jobs.

Both the Institute of Supply Management’s (ISM) manufacturing and service sector activity surveys also declined in March, with manufacturing activity the weakest in 2 years. It was mainly due to the decline in new orders, possibly due to the trade uncertainty.

The 3.2 percent increase in the initial Q1 GDP growth estimate was a pleasant surprise, as I said last week, but it was largely because spending by local governments picked up due to the partial federal government shutdown and a “turnaround in investment, most notably in construction of highways and streets,” said the BEA. 

Local and state governments may have been waiting to see if the Trump administration would chip in to boost needed infrastructure upgrades, and since that didn’t happen states decided to implement the needed projects.

The buildup in unsold inventories, and fewer imports also increased GDP numbers. That’s because import prices are rising as the recent tariff increases are being passed on to the consumer, contrary to what administration officials are saying.

And rising prices will put a cap on growth, as well as future hiring. So we are waiting to see if more are willing to work, or are still waiting for the right job so they can afford to pay for those higher prices.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen