Even as layoffs and the unemployment rate remain low by historical standards, the labor market is softer by many measures. Employers are hiring at the slowest pace in a decade, excluding the pandemic shutdown, job openings have slowed considerably though remain higher than before the pandemic, and workers are not switching jobs as much.
Top policymakers at the Federal Reserve have taken note of the slower labor market, indicating a September rate cut is possible, after two years of high interest rates have curbed inflation, weighing on the broader economy and, increasingly, jobs.
“This is the result of higher interest rates,” said Julia Pollak, chief economist at the jobs site ZipRecruiter. “They’re holding back business investment [in hiring]. They’re making it prohibitively costly for businesses to get loans to expand. And so you have a sort of broad-based private sector slowdown.”
