Ahead of Friday’s employment report, the November JOLTS report (JOLTS survey) showed the number of job openings was slightly lower than expected. Mizuho Securities U.S. Chief Economist Stephen Ricciuto will appear on Yahoo Finance Live and discuss his predictions for the labor market in 2024.
Rikiuto said current data shows that “the labor market remains very tight.” He explained that workers who have been laid off and re-entered the job market are quickly finding new jobs, noting that there are a large number of job openings. This proves that “the labor market remains hot,” Ricciuto said.
“People really, really want the Fed. [Federal Reserve] But with average quarterly GDP growth of 3.5%, Ricciuto called this a “healthy economy” and said “the economy is not giving us that information” to justify a rate cut.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by angel smith.
Miles Udland: Steven Ricciuto shares a little more about the state of the U.S. labor market ahead of this JOLTS report and Friday’s December jobs report. Mizuho Securities US Chief Economist has joined us.
Steve, thank you so much for jumping on board. I would like to talk a little bit about how I view the current labor market. I got the JOLTS numbers. But obviously, what we’ve seen in employment growth, they’re continuing, and, you know, much, much more in terms of how we’re assessing the situation heading into 2024. There’s a big picture there.
Stephen Richt: I think that’s a great question. I think the answer revolves around what we see in terms of initial unemployment claims and continuing claims data. These data are reflected more directly in payroll employment reporting than the JOLTS numbers.
And these two metrics are historically very important. And they show us that the labor market remains very tight. Those who were laid off quickly acquired jobs to replace the ones they lost. And other people are coming in from side jobs and getting new jobs, and that’s why participation rates are going up.
Therefore, when these two events are combined, the high level of job openings—even if the high level is lower than expected—suggests that this I think you can see that the market is still hot.
Miles Udland: And, you know, Steve, we’re going to get the claims data again tomorrow morning in advance of the jobs report coming out on Friday. And then a complaint just appeared on the screen. I think some people may be surprised to find that this number is quite stable. What did you think about real-time labor market indicators?
And I guess, getting to your point of view, I think you said in your note to us that people are too bearish on the outlook right now. What do you think some people would like to know about the data that is incorrect or not shown?
Stephen Richt: And people really, really want the Fed to cut rates. And to some extent, the Fed has been leading the way on this. That’s why since Jerome Powell’s latest press conference, we’ve had to see a number of Fed members come out and try to back away from this idea. The March interest rate cut is because the Fed is serious about reversing some of its policy tightening and implementing insurance rate cuts.
The problem is that the economy isn’t giving them that information. And that will be the final result. The driving force here is whether the Fed has that opportunity. So instead of looking at the data broadly and saying, “He had 5% economic growth in the third quarter of last year,” people want to look at the data and find something constructive. I’ve been thinking about it. Well, in the fourth quarter he grew 2%. That averages out to 3.5% per quarter.
This is a very healthy economy compared to an economy with a trend growth rate of 1% and 3/4%, according to the Congressional Budget Office. This is almost double the trend growth rate. That’s a healthy economy. And people want to ignore it. And they want to focus on areas of growth around 1.5% to 2%, which they believe will lead to Fed rate cuts.