Have we hit the soft landing?
Have we hit the soft landing? The last 30 days in the employment market says maybe.
Now, let me start this off by saying I am in no way an economist. I’ve spent 25 years in the employment industry and have been through all the economics swings imaginable, from the .com bubble and burst in 2001 to the financial market crash of 2008, and the Covid bust and boom of last few years. I’ve learned to watch the data specific to employment and the associated trends.
We look at trends such as the unemployment rate, what industries are hiring and why, and what the available workforce is in comparison to the work that needs to be done. Based on these indicators as well as others that we watch, we might have just hit the soft landing that we were hoping for.
What we have seen happening in the last 30 days is that companies are starting to make moves regarding their hiring. Companies can go two ways; they grow, or they die. Rarely do they stay the same over time. What I’ve seen in the last 30 days is that they are ready to grow again.
Factors to consider:
- Interest rates and Inflation: They are up, and now they are what they are; it’s harder to borrow and money is tight. They likely stay this way a little while longer.
- Flexibility of where to work: The stake is in the ground; whether they choose to be remote, hybrid, or in office, most have put the stake in the ground and said this is who we are.
- Job Openings: Revenues are suffering b/c important roles remain vacant. Post-Covid hiring surges have been mostly purged, and these companies now know what their hiring landscape looks like.
All these factors are now realities that companies have adjusted to, and now they’re ready to grow. The job market has always been a good indicator and tea leaf for our economy. The soft landing we’re experiencing could be a sign of good things to come!
Understanding a Soft Landing
A “soft landing” in the context of economics refers to a controlled and gradual transition from a period of economic expansion to a period of slower growth or stability. In the aftermath of a recession, achieving a soft landing is a highly desirable outcome, as it minimizes the disruptive effects that abrupt economic contractions can have on businesses, households, and overall consumer confidence.
We watch the labor market, which is only one key Indicator of a Soft Landing. Other Key indicators include:
- Steady GDP Growth: A crucial sign of a soft landing is a steady but moderate pace of Gross Domestic Product (GDP) growth. A gradual uptick in economic activity indicates that the recovery is sustainable and not driven by short-term factors.
- Inflation Moderation: One of the significant concerns after a recession is the potential for rapid inflation. A soft landing is characterized by manageable inflation rates, reflecting a balanced approach to economic growth.
- Financial Market Resilience: A smooth recovery is often mirrored in the resilience of financial markets. Gradual and manageable adjustments to interest rates, coupled with stable equity and bond markets, signify that investors have confidence in the economy’s trajectory.
- Consumer and Business Confidence: Confidence levels among consumers and businesses play a vital role in sustaining a soft landing. If households and companies are optimistic about future economic prospects, they are more likely to continue spending and investing, thereby supporting a stable recovery.
Like I wrote earlier, I can only speak to what we’re seeing in the labor market but get your resumes together and clean up those job descriptions because we’re trending up! The war for talent will always be a key success metric for companies that scale. It’s looking like it’s time for everyone to get off the bench and get in the game!
For additional information and perspective on whether we are experiencing an economic “Soft Landing” check out this KMPG article for their perspective on the rest of 2023-24.