2023 Will Test Labor Market’s Resilience (Report Preview)

This memo offers a preview of Morning Consult’s February U.S. Jobs & Labor Report. Morning Consult Economic Intelligence subscribers can access the full report here.

The U.S. labor market is still humming along, boasting strong job growth and a decades-low unemployment rate. However, recession risks are growing as interest rate hikes over the course of 2022 begin to take their full effect and consumers start to pull back on spending. Consumers are increasingly struggling to navigate the ongoing effects from last year’s spike in prices by drawing on credit and savings, and Morning Consult’s proprietary data suggests that consumer spending weakened at the end of 2022. A further slowdown in consumer demand would likely be followed by a slowdown in business investment and hiring. 

Continued elevated nominal wage growth would place pressure on the Federal Reserve to lift rates higher for longer. The prospect of higher wages continues to entice workers to look into making an employment change. As of Jan. 21, 18.4% of employed U.S. adults and 20.1% of prime-age employed U.S. adults said they were actively applying for new positions.  

While job search activity remains elevated overall, the shares of workers in technology and finance who are actively applying has fallen considerably in recent months. Information and technology workers and financial services workers were also most likely to say they expected to experience a pay or income loss in the next four weeks.

On the other hand, workers in industries like retail, where the job market remains hot, are still looking to make a move. As long as a tight labor market continues to fuel elevated job search activity and separations, upward pressure on wages will make the Fed’s mission of price stability especially challenging.

Jobs growth is likely to continue to slow over the next three months as the U.S. economy moves away from the vaccination recovery phase and companies increasingly come to terms with elevated interest rates and weaker consumer demand. In the near term, workers will continue to be reallocated from companies and sectors that overhired during the pandemic to those that still have job openings, limiting the risk of an outright jobs contraction for the next few months. Looking ahead, the range of employment scenarios diverges over the next three to six months, with the fate of the U.S. economy hanging in the balance.

About this report

Morning Consult’s monthly U.S. Jobs & Labor Report provides a detailed assessment of the current state of the U.S. labor market, featuring proprietary data that provides enhanced scale, frequency and depth to official data sets.

Businesses and investors rely on this report to identify emerging labor trends and better understand how to attract, hire and retain talent.

The report draws on Morning Consult Economic Intelligence, a high-frequency global economic data set reflecting more than 17,000 daily economic surveys across the 43 largest global economies.

Full methodology and average daily sample sizes per country can be found here.