Video
Labor market outlook
For fourth quarter 2023.
Labor market outlook
- Hello, I'm Vivian Estadt, client service director at SEI. I'm here with chief market strategist and senior portfolio manager, Jim Solloway, to provide a quick preview of one of the timely topics he covers in our most recent economic outlook. Jim, one of the drivers of inflation in 2023 was the surprisingly tight labor markets. Since inflation will continue to be a major influence on the direction of financial markets in 2024, can you give us your thoughts on how labor markets are likely to trend?
- Thanks, Vivian. The jobs market is still tight. However, there are signs of weakness cropping up, which may bode well with respect to efforts to control inflation. The chart on the screen compares the number of job openings in the U.S. to the number of officially unemployed persons, discouraged workers, and employees in temporary and part-time positions who want to work full-time. We see signs of deterioration on the far right. U.S. job openings, as shown by the light blue line, have been decreasing since March, 2022. Meanwhile, the number of unemployed and underemployed persons as represented by the dark blue line has begun to creep up noticeably. Given this backdrop of easier labor market conditions, it is not surprising then that the U.S. has reported a sharp deceleration of compensation gains over the four quarters, ending the past September. Still, we do not expect a big rise in unemployment. Structural issues such as the continued retirement and exit of the baby boomer generation from the labor force is likely to keep jobs markets tight. Further deceleration and compensation growth will be limited over the next business cycle. As such, we are doubtful that wage pressures will subside to levels that are consistent with central bank's mandated inflation targets.
- Thanks, Jim. We always appreciate your insights. SEI is focused on the major issues that are of interest to our clients. We incorporate these discussions into our advisory process as the impact varies based on each client's goals. For more of SEI's insights, read our latest economic outlook available on our website.
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