Episode 25

Episode summary

New reports from the Bureau of Labor Statistics—JOLTS and The Employment Situation—show that the economy is….fine. Not bad, but also not great. Employers and workers are both biding their time, an economic phenomenon that Liz has coined as The Great Wait.




Liz Wilke (00:00:32) – Hi, I’m Liz Wilke. 

Caleb Newquist (00:00:35) – I’m Caleb Newquist. 

Liz Wilke (00:00:37) – And this is the Gustonomics Podcast. In each episode, we bring you a little bit of economics knowledge so you can be more informed, use the information in your business or work, or kill some time in the DMV. Please remember to rate, review, and subscribe to the show or share it with an economics curious friend. 

Caleb Newquist (00:00:57) – Anything you can do to spread the word about the podcast is greatly appreciated. Liz Wilkie, nice to see you again. 

Liz Wilke (00:01:05) – It’s always great to be with you, Caleb. 

Caleb Newquist (00:01:07) – Yeah, I just saw you in person, which was always a delight. But here we are back on the mics. And it was a very busy week in the world of economics, was it not? 

Liz Wilke (00:01:19) – It was a very busy week, Caleb. Actually two of the biggest economics reports that the Bureau of Labor Statistics put out both came out this week. And they gave us some sort of interesting news. 

Caleb Newquist (00:01:30) – Oh, cool. Great. So what are those two things? And yeah, what are those two things? And what is like the big headline from those two things? 

Liz Wilke (00:01:42) – So the JOLTS report, which I’ve talked about before, but for those of you that don’t remember, stands for the Job Openings and Labor Turnover Survey. That came out on Wednesday. It tells us things like the quits rates and the hiring rates for businesses, et cetera. It also tells us about the number of open jobs in the economy. That report said that the number of open jobs has basically not changed that much, but that quits continue to be low, and that hiring continues to be stable. You wouldn’t really think that that’s big news, and honestly, it’s not. But I’m going to say I think that is the news. And I think combined with the report we got on Friday, which is called the Employment Situation, it’s also better known as the Jobs Report, tells us how many net new jobs were added in the economy over the last month. 

Caleb Newquist (00:02:28) – I’ve never heard it called the Employment Situation for what it’s worth, and I mean that threw me back to like, I hate to say this, but Jersey Shore for a second. And it’s like, oh, we’ve got an economics- like situation. 

Liz Wilke (00:02:42) – Yeah. I cannot confirm or deny that anybody from the Bureau of Labor Statistics has the GTL life. I hope it’s true, to be honest, but I really cannot say. 

Caleb Newquist (00:02:53) – I hope so too. So Liz, what was the big takeaway on the jobs number? Was it a good jobs number? Was it a bad jobs number? Yeah. Give us the lowdown on that. 

Liz Wilke (00:03:03) – I would say it was a fine jobs number. 

Caleb Newquist (00:03:07) – Okay. 

Liz Wilke (00:03:08) – Not great. It’s not as big as December’s jobs number, but people, I think, expected it to be much lower. So to kill your suspension, the jobs number was 275, 000 jobs were added in February. The expectation was 200, 000 jobs. Now I will say that the expert expectation is over a spread. Some people think there won’t be any jobs added, and some people think there might be 300 jobs added. So this is sort of the central point, but the forecast for this number was really all over the place for this month, which basically just means that economists as a whole have lots of different opinions about how the economy is doing right now. 

Caleb Newquist (00:03:51) – No one really knows what’s going on. 

Liz Wilke (00:03:53) – Or everybody thinks they know what’s going on, and nobody’s quite right. 

Caleb Newquist (00:03:59) – Either way, I’m here for it. So okay. Okay. Go on. Digging one level deeper, are there some details on industries or other details that you found interesting? 

Liz Wilke (00:04:12) – Yeah. So, I mean, I think what I was pleased to see is that over the last few months, we’ve had a lot of these jobs numbers come in in a few sectors, right? Government and healthcare have been the big sectors for job gains over the last few months. We actually talked about this in a prior podcast, sort of saying that job gains were beginning to be more concentrated, right, in these parts of the economy, but everybody else was feeling this softness. That doesn’t seem to be true for this one, right? We saw actually, you know, they did take the lion’s share of the jobs gains, but we actually saw a lot more job gains in other industries. What is sort of unusual is that we saw some gains in food and beverage, which I think is attributable to the pretty unseasonably warm February that lots of people had across. country. 

Caleb Newquist (00:04:57) – Warmest February on record, if I’m not mistaken. 

Liz Wilke (00:05:00) – I have also seen that headline. I am not a meteorologist. So I cannot speak to its accuracy. But I am I am inclined to believe that it was a very warm February in DC. 

Caleb Newquist (00:05:10) – It was a very it was a very mild February here in Denver as well. Okay, so Liz Wilke, I get news alerts on my phone. And so I did see the big headline today about the jobs number. But I also saw something that was a little bit, you know, that can sometimes be confusing. And that is that actually the unemployment rate went up a little bit. Now, why on earth would that happen? If if there were all these jobs added, why would the unemployment rate still go up? 

Liz Wilke (00:05:37) – Great question. So the unemployment rate went up this month, not because people were leaving their jobs or losing their jobs, but because people were entering the labor market. So there’s actually three portions of the population from a labor market perspective, there are people with a job. There are people without a job who want a job. Those are the unemployed. And there are people without a job who don’t want a job. And they are not counted as being in the labor market, 

Caleb Newquist (00:06:07) – Like a retiree, for example. 

Liz Wilke (00:06:09) – Yeah, like a retiree, or a stay at home mom, right is not in the labor market. They’re looking they’re not looking for a job. So we don’t count them as unemployed, right? 

Caleb Newquist (00:06:18) – Makes sense. 

Liz Wilke (00:06:18) – But when the economy is doing well, or for seasonal factors, people who were not in the labor market might decide that they want a job, right. And when they decide to start looking for a job, we actually move them to the unemployed category until they find a job. 

Caleb Newquist (00:06:36) – What, Liz, can we take away from more people who previously weren’t looking for jobs? Now they are part of this unemployment number? What do you take away from that? 

Liz Wilke (00:06:48) – When the jobs number goes up, and the unemployment rate goes up, it’s usually taken as a sign of optimism on behalf of workers, right? Because jobs are being added to the economy. And workers are coming off of the sidelines to say, hey, I would like a job too, as opposed to saying, I’m just going to wait this out for reasons that are personal, or financial in their household. I would caveat that by saying that the jump in the unemployment rate is not big. It’s a few hundred thousand workers, because unemployment is already so low. 

Caleb Newquist (00:07:19) – Yep. 

Liz Wilke (00:07:20) – So when you have a moderate increase on an already low number, it, you know, it looks like a more sizable jump. But if you think about it, in terms of the actual numbers, 112, 000 people re entered the labor market, that means they used to have a job, they came out of the labor market, and then they are now looking for a job. And 51, 000 people entered the labor market for the first time ever, right. So then you might think of those as being very young people who are, you know, out and looking for their first job, but taken together, that’s enough to push up this very low unemployment rate up by a few tenths of a point. 

Caleb Newquist (00:07:55) – Right. But overall, it’s a positive sign. 

Liz Wilke (00:07:58) – Yeah, I think overall, it’s a positive sign. I actually would say overall, it’s fine. And that’s sort of my my big headline here is that we got a couple of releases that suggest that it’s fine. Yep. Right. It’s, it’s not bad. It’s not going gangbusters. It’s fine. 

Caleb Newquist (00:08:16) – Okay. 

Liz Wilke (00:08:17) – And from our own data, you know, we’re seeing quits come down. Job openings are stable. And I think we are in the period of what I’m now going to call The Great Wait. 

Caleb Newquist (00:08:28) – Oh, is this a Wilkeism? 

Liz Wilke (00:08:33) – I would not like to call it that I I don’t think it rolls off the tongue at all. 

Caleb Newquist (00:08:40) – We’ll, we’ll let the audience be the judge of that Liz. But in any case, okay, so what is The Great Wait? 

Liz Wilke (00:08:49) – If I had to put it in one sentence, I think it is the dual phenomenon of employers and workers kind of hanging out to see what happens. Quits are down. That means workers are getting more comfortable staying in their jobs now. They’re not sort of flying from one thing to the other. 

Liz Wilke (00:09:09) – That can be a sign either that they’re happier in their jobs because employers made a lot of investments in trying to make their work more attractive, but also it could mean that they aren’t quite sure what’s gonna happen with the economy and you know, the job that they’ve got right now might be comfortable enough and they’re just gonna sort of hold out and see. For employers right, the fact that terminations are really low but job openings are really stable and that the jobs numbers that we’re seeing are positive but not really large, suggests to me that employers are also waiting to see how the economic winds are gonna blow. I think lots of industries are waiting to see when the Fed will start to cut rates. Lots of industries are waiting to see what will happen to the economy when the Fed starts to cut rates. And I think 2024 is starting out as a year of uncertainty and what you do when you’re uncertain. 

Liz Wilke (00:10:03) – If you can, is you wait to see what’s gonna happen? Yeah, there it is: The Great Wait. 

Caleb Newquist (00:10:09) – The Great Wait, excellent. I love it. So let me ask you this. So you, you describe the JOLTS and job numbers, data, or for February, as fine, and so what that makes me think of and the way you kind of described it. It’s not bad, but not going gangbusters. But isn’t this precisely what the Fed wants? They want something that is showing progress but not taking off to the extent that we end up back in a situation where inflation starts to go up again. 

Liz Wilke (00:10:47) – Yes, I, I think this is good news for the Fed. 

Caleb Newquist (00:10:51) – Fine is good, like in this case, fine is very good news. 

Liz Wilke (00:10:55) – If you are an economic regulator, this is good news for you. Okay, for the the 260 million other Americans in the labor market, you probably not feeling much of one way or the other right about this, about this week. 

Caleb Newquist (00:11:13) – Yeah, like, fine is fine, 

Liz Wilke (00:11:15) – Fine is fine. 

Caleb Newquist (00:11:16) – Yeah, fine is fine for us regular people. But it’s very good. If you’re Jerome Powell. 

Liz Wilke (00:11:20) – I, I think it. And it will be especially good if the next inflation release right shows, starts to show more progress, right, I think they’re hoping that the last inflation release, which was a little high, was kind of a blip or some noise, and they’re hoping that they’ll continue to make progress and if they can do that while the labor market is still fine, that is gonna be a really good thing, not just for economic regulators at that point, but for all of us, because that will get rates rate cuts come faster, 

Caleb Newquist (00:11:48) – Right, okay, cool. So for our listeners, owners of businesses and employees of businesses, and- but advisors to businesses, how should they think about this Great Wait? What kind of wisdom can you impart for our listeners in terms of like: is waiting a good thing? Is waiting the right thing to do right now? 

Liz Wilke (00:12:09) – I think it’s. I think it’s fine, right, business survival is more important than business growth, right, for the vast majority of small businesses out there. Yep survival secures the opportunity for future growth for a business and I think that that’s not a bad strategy. It may not be optimal in terms of whether or not every business could grow right now, but I think it’s very strategically useful to hang out and just shore up: shore up your operations, shore up your people, shore up your resilience as a business. I think it will be fine. But people really clearly have a question mark hanging over the way 2024 is gonna roll out. 

Caleb Newquist (00:12:55) – Okay. So, in short, hang out for a bit. 

Liz Wilke (00:13:00) – Yeah, 

Caleb Newquist (00:13:02) – Okay, I think that was a great episode. Thank you, Liz. We hope you all learned something new and useful for yourself, for your business. Please let us know what you think of the podcast by leaving a review or share it with a friend or colleague who might enjoy it. I’m Caleb Newquist and I’m Liz Wilkie. 

Liz Wilke (00:13:17) – Thanks for listening.

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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