Guy Berger, Ph.D.’s Post

In case you are listening to Marketplace on NPR today, you have the (mis?)fortune of hearing me talk about the current job search environment. Many thanks as always to Stephanie Hughes for the stimulating conversation!!! https://lnkd.in/gZEftMdj

The US unemployment rate has gone up by 0.2 percentage points since October 2023. But once you exclude entry into the labor force - either new entrants, or re-entrants - almost that entire increase disappears. (The increase prior to October 2023 reflected other factors, including an increase in layoffs.)

"We are no longer at that Golden Age of [2022]... But by the standards of historical labour markets, this is also not a bad one." Thanks to Omar Mohammed at Newsweek for reaching out to me on this week's BLS JOLTS data. https://lnkd.in/gMpqQFM7

It's been too long since I'd last done it, but I got a chance to chat with Oliver Renick at Schwab Network about the monthly jobs report and what the risks are to the labor market going forward. I'm reasonably optimistic that the labor market will still be expanding by the next time he invites me on. https://lnkd.in/gAc2Duab

Thought provoking suggestion by Gad: how about federal government incentives for locating universities in economically struggling areas? Why hasn't this been tried? (Has it been tried and I'm not aware of it?)

TL;DR: Strong labor supply growth continues to drive labor market cooling and higher unemployment, but employment is holding up ok. 1/ Probably the first detail that jumped out at me in today's jobs report was the increase of the unemployment rate to 4.1%, the highest since late 2021. 2/ Growth in nonfarm employment also appears to be slowing - the 3 month average of 177K per month is the slowest we've seen since early 2021. 3/ HOWEVER: a lot of the "deep cuts" in the report look less concerning. 4/ The increase in unemployment was mostly driven by an increase in new labor force entrants and labor force re-entrants. Unemployment due to permanent layoff actually fell to its lowest level since January. 5/ The share of prime-working-age Americans with a job was unchanged at 80.8% - just shy of a 23 year high. Employment has remained steady even as unemployment has risen - suggesting a rise in "steady state" job search activity rather than job losses. 6/ The share of the labor force that is working part time for economic reasons (people who want full time jobs but can't find them) fell in June to its lowest level of the year. 7/ Job gains were strongest in health care & social assistant (+82K), government (+70K), and professional & business services excluding temp agencies (+32K). The biggest job losses were in temp agencies (-49K), durable goods manufacturing (-10K), and retail trade (-9K).

From this week’s issue of The Economist . This isn’t surprising! Technological innovations take a long time to have a significant economic impact - the timeline is years and sometimes even decades. It takes time to find economically significant use cases, time to adopt those use cases at scale, and time to reallocate resources as a result. Beyond “it’s too early”, this technology is overhyped. Even if you think it will be highly impactful (as I do), it won’t be as big as fire or electricity. If by 2040 it’s as impactful as the Internet or personal computer that will be a pretty big win. https://lnkd.in/g63uB4QW

My preview of June's employment report, which will be published the day after what I hope is a wonderful July 4th holiday for all who celebrate! It'll be sunny and warm here in San Francisco. 1/ In the preview, I ponder our proximity to a recession tipping point. I don't think we're there at the moment... 2/ ...but beyond "at the moment": a few months of consistently worse data would change my mind.

My substack recap of today's BLS JOLTS report. Things could change, but this doesn't look like an economy getting closer to a recessionary tipping point. https://lnkd.in/gDUqAxrP