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Is the US labor market telling a story of change?
Although talks about an imminent recession are plentiful (and GDP contracted in 1H2022 already), the pace of hiring in the United States is still very strong. I speculate that this singularity is explained by a change in workers’ preferences (the so called ‘Great Resignation’). If this change is only temporary, then profit margins will drop in the short term and re-accelerate promptly in 2H2023. If not, then we are at the wake of a new economic model, with possibly less international trade.
According to pollsters, the probability of a US recession in 2023 is at 65%. Technically, a recession already happened in the first half of 2022 (rule of thumb: recession = two consecutive quarters of negative GDP growth), and so we should be in the midst of two recessionary phases. Sounds very ominous, right? Why then the US economy continues to hire lots of people?
Consider the charts above. During the 2007–08 recession, a relatively long period of labor market weakness was experienced. But even before the…
