The U.S. economy added just 209,000 jobs in June 2023, under-performing compared to expectations. CEI economy and labor experts offer analysis on what this portends for employers and workers and what the government can do about it.
Ryan Young, Senior Economist
“A lot of economists thought the economy would be in recession by mid-year due to the Federal Reserve’s monetary tightening. While this June’s jobs numbers are slower than in boom times, it still annualizes to nearly 1.5 million net jobs created per year. The recession remains at bay. That should give the Fed the courage it needs to continue tightening at its next meeting in three weeks, which it needs to do to get inflation back down to an acceptable level.
“Another source of optimism is a high quit rate—currently 2.40 percent, compared to a long-term average of 2.01 percent. People tend not to quit jobs unless they expect to be able to find a new one. While the quit rate is a bit lower than in previous months, it still speaks well of people’s expectations.
Sean Higgins, Research Fellow
“The U.S. economy added only 209,000 in June, below forecasts, as rising inflation forced some employers to cut back on hiring. Those same employers are still undermanned, however, and fighting to keep the workers they have. Average hourly earnings rose by 12 cents in the last month, showing that employers value their workers. At the same time, the number of people working part time for economic reasons rose by 452,000 to 4.2 million. Employers are feeling the impact of consumers cutting back in the face of inflation and are reacting by cutting back on hours rather than letting workers go. Employers are afraid that they won’t get the workers back.”
Joshua Bandoch, Research Fellow
“June provided more reasons to be concerned about the labor market. New jobs came in at 209,000, well below the 2023 average of 278,000. The number of new jobs created in April and May were also revised down by a total of 110,000 jobs, which means the downward trend has been going on for months. Job openings decreased by nearly half a million in May. All this as new graduates look to enter the workforce, and students seek summer work. The labor force participation rate remains at a historically low 62.6 percent. This all adds up to a potentially stormy job market later in 2023 or 2024. With inflation sticking around, the Fed has some tough decisions this summer.”