Wednesday, January 10, 2024

Question #2 for 2024: How much will job growth slow in 2024? Or will the economy lose jobs?

Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2024. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I’ll post thoughts on those in the newsletter (others like GDP and employment will be on this blog).

I'm adding some thoughts, and maybe some predictions for each question.

2) Employment: Through November 2023, the economy added 2.6 million jobs in 2023.   This is down from 4.8 million jobs added in 2022, and 7.3 million in 2021 (the two best years ever), but still a solid year for employment gains. How much will job growth slow in 2024?  Or will the economy lose jobs? 

For review, here is a table of the annual change in total nonfarm, private and public sector payrolls jobs since 1997.  

Change in Payroll Jobs per Year (000s)
Total, NonfarmPrivatePublic
19973,4063,211195
19983,0482,735313
19993,1812,720461
20001,9381,674264
2001-1,733-2,284551
2002-515-748233
2003125167-42
20042,0381,891147
20052,5282,342186
20062,0921,883209
20071,145857288
2008-3,549-3,729180
2009-5,041-4,967-74
20101,0271,243-216
20112,0662,378-312
20122,1742,241-67
20132,2932,360-67
20142,9982,871127
20152,7172,567150
20162,3252,118207
20172,1132,03380
20182,2842,157127
20191,9591,747212
2020-9,289-8,237-1,052
20217,2676,882385
20224,7934,518275
20232,6972,025672

The good news is job market still has momentum heading into 2024.

Employment per monthClick on graph for larger image.

The bad news - for job growth - is that a combination of a slowing economy, demographics and a labor market near full employment suggests fewer jobs will be added in 2024.

This graph shows the jobs added per month since January 2021.  

There was strong job growth in 2021 and 2022 as the economy bounced back from the pandemic recession.

Job growth slowed in 2023 but was still historically strong.

The second table shows the change in construction and manufacturing payrolls starting in 2006.

Construction Jobs (000s)Manufacturing (000s)
2006152-178
2007-195-269
2008-789-896
2009-1,047-1,375
2010-187120
2011144207
2012113158
2013208123
2014361209
201533770
2016188-7
2017273178
2018305263
20191325
2020-173-602
2021239385
2022265390
202319712

For manufacturing, there will probably be some growth in the auto sector in 2024, and possibly in other manufacturing sectors.  However, for construction, multi-family construction will slow in 2024, and so will several commercial real estate sectors (based on both the Architecture Billings Index and the Dodge Momentum Index

So, my forecast is for gains of around 1.0 million to 1.5 million jobs in 2024.  This would be another solid year for employment gains given current demographics.

Here are the Ten Economic Questions for 2024 and a few predictions:

Question #1 for 2024: How much will the economy grow in 2024? Will there be a recession in 2024?
Question #2 for 2024: How much will job growth slow in 2024? Or will the economy lose jobs?
Question #3 for 2024: What will the unemployment rate be in December 2024?
Question #4 for 2024: What will the participation rate be in December 2024?
Question #5 for 2024: What will the YoY core inflation rate be in December 2024?
Question #6 for 2024: What will the Fed Funds rate be in December 2024?
Question #7 for 2024: How much will wages increase in 2024?
Question #8 for 2024: How much will Residential investment change in 2024? How about housing starts and new home sales in 2024?
Question #9 for 2024: What will happen with house prices in 2024?
Question #10 for 2024: Will inventory increase further in 2024?

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