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The task expansion party is over, but it’s starting to simmer.
Employers have created at least 400,000 jobs per month over the past year, the longest series of its kind on record, providing plenty of opportunities for those laid off in the pandemic-induced recession and those seeking higher-paying jobs.
But the May labor market report, due to be released Friday, may reveal the beginning of a slowdown, with economists forecasting job gains of 325,000, according to a median estimate from respondents.
This set would still be physically powerful according to ancient criteria, and a higher number is also possible.
But a slowdown is coming. Average payroll additions per month may fall to 261,000 during the summer and 205,000 during the fall, according to Moody’s Analytics expectations. And some analysts expect an even bigger slowdown, to just over 100,000 by the end of the year.
Several forces are joining forces to improve mood, adding a slowing economy, a persistent shortage of workers, and a U. S. task. The U. S. department of the U. S. is reaching its pre-pandemic point after eliminating 22 million tasks in the spring of 2020.
And that’s not a bad thing.
With inflation near a 40-year high, “the Federal Reserve . . . wants to see things slow down,” as it aggressively raises interest rates to restrict wage and value increases, says Brian Bethune, an economics professor at Boston College. Higher rates discourage indebtedness, moderate economic activity and job growth.
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There are already some symptoms of a cooling market. In April, task posts surpassed their all-time highs, they remained high. Initial claims for unemployment benefits, an indicator of layoffs, are traditionally low, but have surpassed 200,000 in recent weeks for the first time since February. And 47 percent of small businesses said they had positions they couldn’t fill in April, up from 51 percent in September, according to a survey by the National Federation of Independent Business.
So what is the expected slowdown and why is it rarely very bad?
Even before inflation took off a year ago, experts expected job gains and a slowdown in the economy in 2022. After all, government stimulus measures, such as large checks to households, have largely come to an end. And the economy’s initial rebound The COVID-19 recession is expected to subside after the creation of a record 6. 7 million tasks last year.
Today, demanding situations are compounded by the high costs of gasoline, rent, food and other items, Bethune says, largely due to supply chain disruptions and Russia’s war in Ukraine. This has led many other people to restrict some of their spending. – especially on TVs, appliances and furniture – even when they start traveling, attending exhibitions and other activities again.
Add to that the interest rate hikes that began in March and are expected to continue throughout the year, raising the cost of loans for mortgages, auto loans, credit cards and other types of debt.
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Economists expect gross domestic product to grow 2. 6% this year, up from a 37-year high of 5. 7% in 2021, according to the average estimate of respondents in May through Wolters Kluwer Blue Chip Economic Indicators.
The percentage of adults running or looking for paintings has risen over the past year, from 61. 6% to 62. 2% in April, remaining well below its pre-COVID mark of 63. 4%. Many other people who feared COVID, were cared for in poor family health housing, or whose income was supplemented through stimulus checks, have returned to a favorable labor market, where wages are rising.
But Gus Faucher, lead economist at PNC’s Financial Services Group, believes Americans’ return to the hard work market will slow, leading to continued staff shortages that will reduce job growth.
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“Most of the other people who wanted to come back have already returned,” he says.
And most older Americans who retired before COVID probably wouldn’t return, Faucher says. It estimates that the labor participation rate will reach between 62. 5% and 63%.
The economy lost 22 million jobs in the spring of 2020, yet it’s now just 1. 2 million of its pre-COVID payroll, a hole that will likely close over the summer. This means that many restaurants, hotels, cinemas and other corporations that have laid off staff have rehired many, recruited new staff or discovered tactics to manage with fewer staff. The number of other people temporarily laid off reached 18 million two years ago, but fell to 853,000 in April, just above its pre-crisis point of 801,000.
“It’s the fruit we have at hand,” Bethune says of the fired who have been removed.
And Ian Shepherdson, lead economist at Pantheon Macroeconomics, wrote in a note to clients, “Employment expansion will most likely continue to slow as payroll levels approach their pre-COVID peak. “
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Paul Davidson is the senior economic correspondent for USA TODAY. You can follow him on Twitter @PDavidsonusat and subscribe to our Daily Money newsletter for private financial advice and trading news on Monday Friday mornings.
This article originally published in USA TODAY: The June 2022 jobs report would possibly show a slowdown in growth. But it’s not all bad.