By Peter Weddle, Founder & CEO TAtech
That thud you just heard wasn’t the economy’s much anticipated soft landing, but instead it was the job market hitting a depressing low.
According to the latest JOLTS report, the U.S. saw just 7.67 million job openings in July, which was almost 6 percent lower than what the so-called experts expected. The August jobs report was better, but not good enough to tamp down worries about the economy. Predictably, Wall Street has the jitters, and the talking heads on CNBC have started using the R word.
What does this mean for job boards and talent technology companies?
It doesn’t take an Nobel economist to figure out that neither report is a positive indicator for TA solution providers. Moreover, their dismal numbers did not occur in a vacuum. Job openings have been trending down for months now, creating an inescapable evidentiary burden that will almost certainly compel the U.S. Federal Reserve to act. More than that, it will cause the agency to act more aggressively than it might have just a couple of weeks ago.
If that happens – if we soon get a significant cut in interest rates – what changes can job boards and talent technology companies expect in the job market?
Lower rates, of course, mean that credit will be less expensive, so consumers are likely to increase their spending and might do so enough that two things happen:
• First, retailers hire more salespeople to move products out the door, and
• Second, manufacturers, trucking firms and warehouses will add more workers to keep up.
Both of these groups may also expand their operations. Retailers might open new stores, manufacturers might invest in new or upgraded plants, trucking firms might buy more trucks and warehouses might add more capacity. And, those steps, in turn, might cause an uptick in product development and advertising as companies rush to avoid being left behind. It is the quintessential response to more liquidity in the economy and it will definitely generate a demand for new hires.
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Something Good for Your Halloween Bucket
A positive outcome – even with an interest rate cut – is by no means certain, however. The economy is driven as much by psychology as it is by Keynesian principles, and unfortunately, it is also possible that consumers will decrease their spending because they’ve been spooked by ominous commentary.
For example, one economist recently opined that “We’ve hit the spot where cooling in the labor market can’t just come from fewer job openings, unemployment will likely continue to rise as well.” That’s exactly the kind of backside covering comment that will cool consumers’ shopping ardor, but hey, what can you expect from economics? It isn’t called the miserable science for nothing.
Moreover, I think it’s well off-the-mark for two reasons:
• First, the U.S. unemployment rate of 4.30 is far below its historical norm of 5.69%, so lots of people have money in their pockets and a lower interest rate will make it feel like they have even more.
• And second, Black Friday no longer marks the beginning of the Holiday shopping campaign. These days, people begin buying gifts for spouses, kids and relatives much early, say around Halloween.
That’s why I think we’re going to have a Halloween treat. My crystal ball is definitely no better than anyone else’s, but with interest rate cuts starting soon and likely to be larger than the average 25 basis points (0.25%), consumers will have every incentive to increase their spending. That’ll probably start around the end of October, and when it does, recruiting will significantly increase.
Will it be a 2022-like tsunami? No. But, it will be a rising tide for job boards and talent technology companies, and in my crystal ball, that makes it a Halloween treat.
Food for Thought,
Peter
Peter Weddle has authored or edited over two dozen books and been a columnist for The Wall Street Journal. He is the founder and CEO of TAtech: The Association for Talent Acquisition Solutions.