SEPT 2023 JOB OUTLOOK

SEPTEMBER 2023

JOB OUTLOOK

In this report, I will provide a summary and analysis of JP Morgan's Midyear 2023 outlook on the U.S. economy and its implications for the job market, particularly for top engineers and top employers worldwide. The report covers ten key considerations for the U.S. economy, and I will explore how each of these factors may influence the employment landscape.

COMMERCIAL REAL ESTATE CHALLENGES REGIONAL BANKS AND LOAN GROWTH

Regional banks face uncertainties in lending growth, potentially impacting the overall economy. Challenges in the commercial real estate sector, including lease renewals and maturing debt, could intensify. The health of the banking sector influences the availability of financing for businesses, which, in turn, affects job creation. The real estate sector's health WILL have DOWNTURN ripple effects on engineering and construction jobs and the financial stability of related industries.

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DEBT CEILING RESOLUTION

While a debt ceiling crisis was averted, government spending reductions may have slight economic impacts. Fitch downgraded the U.S. credit rating. Reduced government spending may affect public sector engineering jobs, while the credit downgrade could influence financial markets and funding for employers.

HOUSING MARKET

The housing market is stabilizing, with mortgage rates holding steady. Home values remain elevated, albeit with historically low vacancy rates. Stability in the housing market can indirectly impact job mobility and location choices for engineers.

CONSUMER SPENDING

Supply chain bottlenecks have largely been resolved, with improved shipping, availability of some commodities, and shorter delivery times. A smoother supply chain can benefit companies across various sectors, potentially leading to increased hiring of engineers involved in supply chain management and logistics.

LABOR MARKET CONDITIONS

Despite a low 3.5% unemployment rate, some mixed signals in the labor market have emerged. Declining labor force productivity metrics and mounting pressure on corporate profit margins could impact hiring trends. Tight labor markets still benefit top engineers, but they should remain attuned to potential shifts in hiring practices among top employers.

INFLATION TRENDS

Inflation, although gradually improving, has proven more persistent than anticipated. Core inflation metrics, excluding volatile energy and food prices, have seen less progress, especially in services categories. Persistent inflation affects purchasing power and business costs. Top employers may need to carefully manage their budgets and compensation packages, which can influence top engineers' job prospects and salary negotiations.

END OF THE FED'S HIKING CYCLE

The Federal Reserve's aggressive rate hikes, one of the steepest in decades, may be coming to an end. The report suggests that the Fed might maintain interest rates at their current levels, assuming inflation continues to decrease. A stable interest rate environment provides a favorable backdrop for business investments and hiring, benefiting both top engineers seeking opportunities and top employers looking to expand.

STRONGER-THAN-EXPECTED U.S. ECONOMY

JP Morgan's report highlights that the U.S. economy has outperformed expectations, with a projected annualized GDP growth rate of 2.0 to 2.4% for the first half of 2023. Consumer spending, a major driver of GDP, has remained resilient, although a potential moderation in the second half of the year could slow down growth. Top employers will expand their workforce to meet growing market demands. A robust U.S. economy typically translates into increased demand for skilled professionals, including top engineers.

James Beine
Top Engineer