Job openings fell slightly in November as recession fears grow
Zachary Halaschak
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The number of job openings fell just a bit in November as the labor market is beginning to feel the effects of the Federal Reserve’s interest rate hikes.
Openings across all sectors declined to 10.46 million in November, down from 10.5 million the month before, according to data released on Wednesday by the Bureau of Labor Statistics.
Hires were little changed in November, as were layoffs. The rate of people quitting their jobs was also about the same as the month before.
The largest decreases in job openings were in finance and insurance, as well as in the federal government, while job openings increased in professional and business services and in nondurable goods manufacturing.
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Despite the slight decrease, job openings remain relatively high by historical standards. Since the Fed began jacking up rates to fight inflation early last year, openings have generally fallen, although perhaps not as quickly as many economists predicted.
Fed Chairman Jerome Powell has said that openings “need” to come down in order for inflation to be tamed. The Fed has aggressively hiked rates throughout the year, with central bank officials driving up its interest rate target by half a percentage point last month after several months of massive 0.75 percentage point hikes.
Inflation is still clocking in at levels that are far too high, meaning that the Fed must hike rates. While pushing up rates slows inflation by reducing economy-wide spending, it also has the effect of hurting economic growth and creating job loss.
Many economists are predicting at least a mild recession sometime this year due to the bevy of rate hikes in 2022. Raising rates while avoiding a recession, something known as a soft landing, is difficult because the full effects of the rate increases on the economy and labor market take time to materialize.
Economists foresee jobs being lost as the economy slows in 2023. Fed officials in December predicted that the unemployment rate will rise from the 3.7% level it is at now up to 4.6% by the end of this year. They also project the unemployment rate remaining around that level through 2025.
There have been a few positive developments in the fight against inflation. The November consumer price index report found that inflation grew 7.1% in the 12 months ending in November. While the pace is a welcome improvement from previous months and comes as the central bank eases off the gas a bit, it is still several times much larger than is healthy.
Gross domestic product grew at a seasonally adjusted 3.2% annual rate in the third quarter after declining in the first half of the year, the Bureau of Economic Analysis reported in a surprisingly encouraging third and final estimate.
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Still, gross domestic income, which is an alternative measure of economic growth (that theoretically should be in sync with GDP), increased at a more lackluster 0.8% rate in the third quarter.
The Fed is next set to meet at the end of this month and will decide to what degree it intends to hike rates once again.