A just-published report updated our outlook for the U.S. labor market, concluding that the labor market is in a non-recessionary low hiring funk, with overall policy uncertainty keeping firms cautious and low immigration restraining labor supply.
It is only at the very front of the age distribution (workers aged 20 to 24 years) where there has been a net decline in jobs recently. This selective slowdown seems to fit the idea that firms are mainly holding back due to policy uncertainty and are refraining from hiring the usual number of new entry-level workers (but are not willing to let go of existing experienced workers). Keep in mind, the “breakeven” pace of monthly job creation for the economy has fallen significantly due to the collapse in immigration, perhaps to as low as 30,000 per month.
Hiring may remain mushy in the near term, but we do not anticipate a meaningful rise in layoffs ahead given the underlying health of the corporate sector. Net: U.S. employment growth has downshifted but labor market conditions are likely to stay tight.
