All articles tagged with #labor supply
A significant decline in US immigration, especially at the southern border, is causing a major supply shock to the economy, potentially more impactful than tariffs, by slowing labor force growth and influencing monetary policy and currency value.
The pay premium for new hires has significantly decreased in recent months, with year-over-year pay growth falling to just 2.9% in September, compared to a 10% jump earlier in the year. Lower quit rates, increasing labor supply, and falling worker demand are contributing factors to the slowing wage growth. Industries such as finance and technology have been hit particularly hard, with pay growth at a standstill or even decreasing. Jobseekers are experiencing lower salaries and fewer negotiation opportunities compared to the "golden age for jobseekers" in 2021 and early 2022. Employers are hesitant to give pay raises to new hires to avoid exacerbating pay equity issues and to retain existing employees. Instead, they are offering low-cost benefits to attract talent.
Two recession indicators, the Sahm Rule and the yield curve, are on the verge of flashing, but stock market investors can still rest easy as the drivers behind each indicator are different than they were in the past. The rise in unemployment is being driven by an increase in labor supply, not economic weakness, and the yield curve is narrowing due to stronger-than-expected economic growth prospects. These factors suggest that the potential flashing of these indicators might not be enough to cause a recession or significantly impact the stock market and broader economy.