Welcome to the Job landscape. Get ready – We are stepping back in time to pre-pandemic days. That’s right, around 5 years ago!
Stronger labor force participation, increased wages, and a booming health care sector are all contributing to the resurrection of the US job market. According to Nick Bunker, director of economic research at Indeed, this trend is expected to continue into the next year. “I think the 2024 job market will look a lot like the 2019 market,” he told Quartz.
But what about the stocks? How long can consumer spending keep them propped up?
Prior to the pandemic, healthcare was a major driving force in the US job market. Bunker noted that the sector lost half a million jobs between February and December 2020, primarily in nursing and residential care facilities, according to data from the US Bureau of Labor Statistics PDF. Despite substantial job gains in hospitality and leisure in 2021, healthcare jobs saw minimal growth. However, the sector began to bounce back in 2022 and has been adding an average of 54,000 jobs each month this year. In November, healthcare made up almost 40% (PDF) of the total job growth, according to labor data released by the Bureau of Labor Statistics on December 8th.
“This is a return to the pre-pandemic status quo,” said Bunker. “We’re back on track with the long-term underlying trend, which seems to be healthcare leading the way in job gains.” This is driven by the aging American population and the rising healthcare costs in the US.
In November, workforce participation reached its highest rate (PDF) since the months leading up to the pandemic, ranging from 63.2% to 63.4%. Unemployment also slightly dropped to 3.7% from 3.8% in October. Earnings have been rising faster than inflation since May, although the pace has slowed.
“Nominal wage growth, or wage growth before inflation, soared to very high levels in 2021 and 2022,” Bunker said. “It’s now coming back down to earth.”
A comfortable landing for the economy
The November employment report is a clear sign that a soft landing is approaching for the US economy.
With inflation easing and a cooling job market, the Fed has refrained from further interest rate hikes, while employment figures have remained strong. “Increased labor force participation, a slight drop in unemployment rates, and significant job gains all point to a story of a soft landing that should not require further hikes from the Fed and could even lead to cuts starting in mid-2024,” said Brett House, a professor of economics at Columbia Business School.
Americans are starting to feel more optimistic about the economy as inflation eases. Consumer sentiment has risen by 13% so far this month,
