On March 17, 2022, the Federal Reserve raised the federal funds rate by one-quarter of a percent (25 basis points). It was the first of what has now been eight rate hikes in an effort to slow the economy and tame inflation.
At that time there were 11.9 million job openings, and the unemployment rate was 3.6%. There were around two jobs open for every available worker. Federal Reserve chairman Jerome Powell has often talked about the pain that the rate hikes would have on the economy and employment.
But here’s the thing — they haven’t. Last week saw several jobs reports where the most-used word in the media was “unexpectedly.” Job openings unexpectedly surged to 11 million, jobless claims unexpectedly dropped to their lowest level in nine months, and the unemployment rate unexpectedly dropped to 3.4%, a 53-year low.
The “experts” were expecting payrolls to increase by 187,000 in January, but they unexpectedly came in at 517,000. Four months ago, we first laid out the case that the Fed’s interest rate hikes were not influencing the labor market, and that you should be aggressively hiring.
Job growth in plastics manufacturing has been steady, certainly not spectacular but also without the volatility that we have seen in other sectors. Do not be fooled by the occasional headline of layoffs. Bad news grabs headlines, but there will always be special situations and poorly run companies. And if you read beyond the headlines, many of those layoffs are not in the United States.
Many of my best clients tell me they would hire 50 people tomorrow if they could find them. As Talent Talk has often predicted, the Fed will likely continue to raise rates beyond what the markets would like to see. This will keep phrases like “potential recession” in the news, but we need to view this as an opportunity. Any recession is likely to be short and shallow. Today’s reality is 1.9 jobs open for every available worker, only slightly below the all-time high and double what it was just five years ago.
About the author
Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].