Mild recession likely would restrain job growth
~December 15th, 2022
Whether we’re headed for a recession or a soft economic landing, little or no job growth is expected in 2023.
Grant Forsyth, chief economist at Avista Corp., says employment growth started to slow early this year, and that slowdown has continued throughout this year. In all likelihood, that trend will carry on through 2023.
The cause, he says, is an “odd mix” of labor shortages and a slowing economy, which is occurring largely because of Federal Reserve policy involving raising interest rates to tamp down inflation.
Economists are debating whether the U.S. will fall into recession next year or if the economy will experience a softer landing. Forsyth says he’s in the camp that expects a mild recession and no jobs growth.
“It’s not going to look like the Great Recession,” he says. “It’s going to look more like the early ’90s or the early 2000s.”
Even if the U.S. economy avoids contraction next year, he doesn’t expect job growth in Spokane to exceed 1% because of the inflationary environment.
Doug Tweedy, the Spokane-based economist for the Washington Employment Security Department, points out the slowdown in the number of new jobs is occurring at a time when the region has a record number of total jobs and job openings. Also, he says, the jobless rate is historically low.
According to the most recent ESD jobs report, total employment in the Spokane Metropolitan Statistical Area stood at about 279,600, with about 2,300 jobs added in October. The jobless rate in the MSA came in at 3.9% in October, up slightly from 3.8% in September but down from 4.2% in October 2021.
In that environment, economists say, sectors such as health care, hospitality, and retail continue to struggle to find workers to fill workforce gaps that were exacerbated during the pandemic.
Other sectors, however, might feel a slowdown more profoundly. Companies in the tech sector already have announced some large layoffs, and some consumer spending-sensitive corporations are starting to indicate either plans to downsize or to pause growth.
So far, many of the tech layoffs are in specific programs that aren’t working out at a headquarters level, which suggests they are less likely to have a significant impact on operations in Spokane.
Tweedy says one new, national trend to watch is a phenomenon in which more teenagers are bypassing college and going straight to work in jobs in transportation, warehousing, construction, and manufacturing. At the national level, the rate of teenagers entering the labor force is at the highest it’s been in the last 10 years.
“This is a new trend,” he says. “We’ve always had a worry that teenagers didn’t have enough job opportunities. Now, they seem to be entering the labor force at a faster rate, and that has to do with more opportunities due to worker shortages.”