Cooling labor market is what Fed wants, says economist; Triangle job openings fall again

RESEARCH TRIANGLE PARK — Job openings in the Triangle continue to fall, according to the most recent edition of the WRAL TechWire Jobs Report. For the second week in a row and for the tenth time this year, the total number of postings fell to the lowest since WRAL began tracking this data two years ago — now to 250,476 postings total (not accounting for post duplications).

Economics professor Tyler Schipper said in a recent WalletHub report that he anticipates the job market will “continue to slow.” That point was made clear Monday with the latest N.C. Technology Association’s tech job openings report. Numbers are down 50% from a year ago and have declined three straight months.

“This is exactly what the Federal Reserve is trying to engineer,” said Schipper in the report. “They want the labor market to cool just enough to guide inflation back to their target rate of 2%.”

Tech job seekers, watch out: Openings across N.C. plunge 50% from year ago

The WalletHub report looked at changes in the unemployment rate by state. The report compared data for all 50 states, looking at the unemployment rate for April 2023 and comparing that to March 2023, April 2022, April 2020, and April 2019 data.

North Carolina, the nation’s 9th largest state in population, ranked at No. 36.

The rankings report pulled data from April federal jobs report numbers, which showed NC’s unemployment rate for April 2023 at 3.4%, a 2.3% decline from March 2023.

Nevada had the highest unemployment rate of all states in April 2023 at 5.4%, while South Dakota had the lowest at 1.9%. The US as a whole averaged a 3.4% unemployment rate.

The Federal Reserve has predicted repeatedly this year that unemployment could go as high as 4.5-4.6%.

“If this ‘worst-case scenario’ comes true, it could mean that millions of people who now have jobs could wind up unemployed,” said Jill Gonzalez, WalletHub Analyst.

While low unemployment is usually regarded as a good sign, very low unemployment can have negative effects like rising inflation. If unemployment rates stay low or drop even more, the Fed could decide to continue tightening credit markets to try and stem inflation—which could lead to negative consequences, Schipper predicts.

Schipper said that a soft landing — “where they meet their inflation target without causing a recession”— is still possible, but it depends on the Fed.

“There are risks though that the Fed will overshoot and tighten credit markets too much,” said Schipper in the report.

Schipper also worries about other issues from “dysfunction in Washington.”

“Will the debt ceiling be increased? Will there be government shutdowns or draconian cuts to fiscal spending? With the Fed performing a highwire act, those types of disruptions could be enough to precipitate a recession,” said Schipper