WARNING: Labor market conditions index has been steadily declining
This systematically happens prior to recessions pic.twitter.com/w3YYWHR566
— Bravos Research (@bravosresearch) August 26, 2024
US firms’ ‘low firing’ approach may turn to more layoffs, Fed’s Barkin tells BBG
WASHINGTON, Aug 26 (Reuters) – The “low-hiring, low-firing” approach that U.S. businesses currently take to their employment decisions is unlikely to last, Richmond Federal Reserve President Thomas Barkin said in newly released comments, citing the risk that firms could resort to layoffs if the economy weakens.
Concerns about the job market have intensified at the U.S. central bank in recent weeks and are a core reason for why Fed Chair Jerome Powell said in a speech on Friday that interest rate cuts were needed to prevent any further and unwanted erosion in U.S. joblessness.
It isn’t happening yet as firms remain reluctant to fire employees even as they’ve become more conservative in filling positions, Barkin said in comments to the Bloomberg “Odd Lots” podcast, which was recorded on Friday at a Fed economic symposium and released on Monday.
But “either demand will continue and people will start hiring again, or you will start to see layoffs,” Barkin said. “We are in a low-hiring, low-firing, mode. That does not feel like something that is going to persist. It is going to move left or it is going to move right.”