Kiplinger's Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or for more information.
It was another strong month for hiring, with 311,000 jobs added in February. Despite that, there are signs of a coming slowdown in hiring, and of increasing slack in the labor market. For example, the unemployment rate moved up to 3.6% from 3.4%. The number of newly unemployed people jumped, as did the number of workers being forced to work part-time instead of full-time. Employment in trucking and delivery services related to e-commerce declined, illustrating that the boom in goods sales is ending. Manufacturing industries are starting to cut back, though slowly. Hiring in the hospitality industry is still in recovery mode, which is why it has been strong recently but is unlikely to maintain that pace as the economy slows.
Wage growth slowed for all workers in February, to a 3.6% pace over the past three months, though the yearly rate is still 4.6%. We expect that the yearly rate will also slow to around 3.6% before the end of 2023. However, wage growth for production workers rose in February to a yearly rate of 5.3%. We expect this to come down to 4.3% before year-end.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But the labor market slowdown will take time. The health care industry is severely short on help, so expect its hiring to stay steady despite any economic downturn. The same is true of K-12 education, where teachers are in short supply.
The Federal Reserve will continue to raise interest rates to try to slow the economy and cool inflation, with quarter-point rate hikes likely at its next three meetings on March 22, May 3 and June 14. The exact pace and size of the hikes will depend on further evidence of a labor market slowdown, and also on upcoming Consumer Price Index (CPI) reports, the next of which will be released on March 14. If Fed Chair Jerome Powell sees continued signs of an economic slowdown in the next few months, it is likely that the Fed will pause its rate hikes.
Related content
-
-
Stock Market Today: Stocks Sink After Latest Fed Rate Hike
The major indexes sold off sharply Wednesday even amid signs the Fed's rate-hike campaign could be nearing an end.
-
Fed Hikes Interest Rates Yet Again: What the Experts Are Saying
Federal Reserve The Fed tweaked its hawkish policy on interest rates even as the fight against inflation took precedence over turmoil in the banking sector.
-
Kiplinger's Retail Outlook: Consumers Are Still Resilient
Economic Forecasts Kiplinger's Retail Outlook: Sales this year are likely to be mostly stable, even as the economy slows.
-
Kiplinger’s Interest Rates Outlook: Rates Likely to Rise Again After Banking Crisis is Over
Economic Forecasts Kiplinger’s Interest Rates Outlook: Rates Likely to Rise Again After Banking Crisis is Over
-
Kiplinger Housing Outlook: Housing Starts Continue to Fall
Economic Forecasts Kiplinger Housing Outlook: Weakness lies ahead for the housing market as high prices, mortgage rates ding affordability.
-
The Most Expensive Natural Disasters in U.S. History
Economic Forecasts Wind, water, fire and drought have all wreaked havoc on the United States. What’s been the worst?
-
PODCAST: Is a Recession Coming?
Smart Buying With a lot of recession talk out there, we might just talk ourselves into one. We take that risk with Jim Patterson of The Kiplinger Letter. Also, dollar stores: deal or no deal?
-
Stick With Your Plan
Financial Planning Timing the market is nearly impossible. The worst thing you can do is sell stocks when prices are tumbling.
-
There's No Vaccine Against Inflation
Economic Forecasts Prices should ease in 2022, but inflation will remain above the levels of recent years.
-
Long-Term Rates Will Edge Higher
Economic Forecasts Yields on bank savings accounts will stay low. Home mortgage rates will remain affordable.
