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- The US added 236,000 jobs in March, lower than the first two months of 2023.
- But economists say this is still a good market for the job seeker and job switcher.
- It's set up a Goldilocks situation heading into summer, where the job market is cooling, but not enough to have an adverse effect on the average American.
The US economy may finally be not-too-hot, and not-too-cold, tipping us into a Goldilocks moment.
That could mean a summer of fewer price spikes at the grocery store, and less businesses scrambling to hire, while workers maintain some power in the job market.
The evidence is in the latest data: Hiring is still strong, but companies aren't as hard-pressed to fill open jobs. Inflation is looking a lot better, and the tech layoffs dominating headlines haven't spread to the larger economy. The cherry on top is that all of this could ease concerns of a too-hot economy and push to raise interest rates.
Last Friday, the country saw a "Goldilocks" jobs report, Glassdoor lead economist Daniel Zhao told Insider. With 236,000 payrolls added in March, it wasn't another blockbuster month of growth that prompts inflationary fears, but still good news for the economy.
"We're still in a hot labor market," Nick Bunker, the economic research director for North America at Indeed Hiring Lab, told Insider. "It's just that the temperature isn't as high as it was, say, in early 2022."
And inflation, as measured by the Consumer Price Index, has been slowing its roll. It took a big dive in March, with an increase of 5.0% year-over-year — a full percentage point lower than February's 6.0% rate.
It's a tempering of the recovery economy, that's finally showing some signs of consistency — suggesting that the wild economic rollercoaster of the past three years is now more akin to a people mover, calmly getting everyone where they're meant to be.
Getting to a just-right job market
Bunker told Insider the US job market is getting close to something that looks like what we saw prior to the pandemic.
"We now have two months of data showing a rapid decline in openings, which have fallen by about 1.3 million over the past two months," Bunker wrote last Tuesday in his commentary about BLS job openings data. "At this rate, we'd return to a pre-pandemic level of openings by this summer."
While that may mean fewer open jobs and less job-hopping than the past year, it's still good job market out there.
Julia Pollak, the chief economist at ZipRecruiter, said the most recent data release on quits, job openings, hires, as well as layoffs and discharges from the Bureau of Labor Statistics "pointed to normalizing demand for labor, following the mass rehiring frenzy of 2021-2022."
Pollak said we're also seeing some permanent shifts in job market dynamics.
"Employee quits seem to be permanently higher, and layoffs permanently lower, than was normal in the twenty years before the pandemic," she added. "In other words, workers seem to have more control over when and how they switch jobs."
The exception, of course, comes in the layoffs seen in a few specific sectors like tech. While industry-level job openings data show a recent drop in demand for some sectors like accommodation and food services, leisure and hospitality, retail, and manufacturing, mass job cuts don't seem to be spreading to other sectors yet. If they did, it would represent a job market tipping into the "too cold" zone.
According to Bunker, the "unwinding of some pandemic-era habits" in terms of household spending could have contributed to the fall in employment from February to March for construction, retail trade, and manufacturing. But there's other industries thriving, which Bunker told Insider "can be a source of opportunities or job gains for some of these workers that might be experiencing job loss or sort of fewer opportunities than before."
"While there does seem to be some weakness on the goods-producing side, the service side is still chugging along there and also it's a much larger share of the economy as well," he added.
But a slowly cooling market is still a good thing for long-term economic prospects, especially as the Fed still tries to slow the roll of high prices.
"I think the labor market is very close to being in balance, and that's something that the Fed talks about a lot," Zhao told Insider.