Racking up the biggest drop in temp labor since early 2021, U.S. employers jettisoned 110,800 temporary workers from August through December last year. And with the failure of the holiday shopping splurge, 35,000 temp workers were cut from the market in December alone.
As with the dot.com bust and the Panic of ’08, the signals of recessionary stress ahead were major layoffs in the temp sector.
The U.S. labor market is at near-record employment levels but shows signs of slowing. Amazon, Google, and other tech companies are in the process of laying off hundreds of thousands of staffers and now non-tech companies are paring back their payrolls, as we detail in “Layoffs Expand Beyond the Tech Sector as Jobs Market Slumps” in this issue. The economy added 223,000 jobs in December, the fewest in two years. (Also see our “WHEN THE ECONOMY FALLS JOBS GO WITH IT” report in this week’s Trends Journal).
Companies are hiring more slowly, open jobs are less plentiful, and jobless workers are collecting unemployment benefits longer. Workers’ average weekly hours on the job have shrunk back to pre-COVID levels. Overtime hours at factories have been cut back to COVID-era lockdown levels.
Although consumers are still spending on travel and other services, demand for goods is weakening.
TREND FORECAST: Again, as we noted above with the dot.com bust and the Panic of ’08, the loss of temp jobs is a flashing signal that the worst is yet to come. And the higher and faster the Federal Reserve raises interest rates, the higher the unemployment number will rise and the deeper the economy will fall.