CHAPEL HILL – A UNC economist said Friday that he sees job market “stabilization” in the latest US employment data—but he also shared predictions about a “hard landing” for the economy.

In an economic briefing hosted by the Kenan Institute, former institute executive director Greg Brown reviewed job numbers for November, which were reported today by the U.S. Bureau of Labor Statistics.

Nonfarm payroll employment increased by 199,000 in November, which is “a little bit above the expected values,” says Brown.

The unemployment rate edged down to 3.7 percent, “just within a hair of the unemployment rate’s all-time low,” said Brown.

Unemployment Data | Source: Kenan Institute

The lows are close to the historic low unemployment rate after World War II, said Brown.

He also commented on the average monthly payroll gain of around 200,000, which he says is “a lot.”

“When you think about what demographic trends are in the US, 200,000 a month may not be sustainable, right,” said Brown. “It may be more than the economy can sustain and, essentially, not go back to, sort of, an overheating type of mode, and not prevent the Fed from cutting rates.”

Will good jobs news today create some bad news later? Economist says …

Hard landing or soft landing?

The Fed is scheduled to have a two-day policy meeting next week, and investors will be analyzing their comments for clues about potential raises in interest rates.

“I think there’s a debate right now, happening in markets and among economists,” said Brown. “‘Are we headed for the Goldilocks soft landing?'”

Brown says that the recent stock rallies suggest that the markets believe the Fed will avoid raising rates, which will enable the “soft landing.”

“The alternative, of course, being a ‘hard landing,’ and that is—the Fed’s got more work to do, or at least is going to have to keep rates higher for longer,” said Brown. “And that’s going to risk the economy going into a recession at some point.”

Inflationary pressures and housing shortages are still strong, says Brown, and trending in the wrong direction.

“The trend here, over the last two quarters, has been to higher housing and utilities costs, not lower costs,” said Brown.

Brown shared how he thinks these numbers will affect the Fed’s decision about rates.

“In my mind, this says the Fed may not be such a friend to the markets as markets seem to believe right now,” said Brown.

He also questioned the possibility of a soft landing.

“I think there’s this question of the soft landing,” said Brown. “We’re still circling, we’re still, you know, 30,000 feet. We’re not even anywhere near landing, right? Now, if you take the employment data at face value, especially the household survey, that means the Fed is going to have to be higher for longer. Maybe they’re not even done yet. Who knows. I mean, right now, clearly, there’s expectations of Fed cuts next year, but are those reasonable?”