Can Employment Continue To Grow?
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The labor market is dominant in driving variation in overall economic activity. This has been particularly true in the post-pandemic era, where employment growth has been the dominant driver of household incomes and spending. However, over the last few months, we have begun to see signs of some deterioration. To get a deeper understanding of this deterioration, we examine the primary big-picture drivers of employment growth to understand the durability of current trends.
Our observations are as follows:
Population growth fueled by immigration has driven employment growth, despite weakness in participation and employment rates.
Adjusting for population benchmark revisions, employment growth is now flirting with contraction.
With slowing immigration rates, stable labor force participation rates, and declining employment rates, there is potential for the labor market to continue its downturn.
We work through this picture in detail in our latest note. If you are a professional investor interested in access to Prometheus Institutional or a copy of this note, email us at info@prometheus-research.com.
