Latest / The Macro Memo with Fexingo: Daily Conversations on Inflation, GDP, and Federal Reserve Policy / What Job Openings Are Actually Telling Us About the Economy
Transcript
- Lucas: So the JOLTS data came out yesterday, and job openings jumped to 7.6 million in April. That's up from 6.9 million in March, and it's a pretty clear signal that employers are still trying to hire. But here's the thing — hiring didn't move much. Total hires only ticked up slightly. Luna: Right, so we have this big gap. Openings are surging, but actual hiring is sluggish. That feels like the story of the last year, honestly. Lucas: Exactly. And it's a weird puzzle. If companies have all these open roles, why aren't they filling them? And if workers aren't moving, what's holding them back? That's what I want to dig into today. Luna: Before we go too deep — I want to mention something quickly. If you're finding these macro conversations helpful, a handful of listeners actually chip in monthly to keep this show ad-free. It's through buy me a coffee dot com slash fexingo. Lucas: Yeah, and that's genuinely what lets us spend time on episodes like this — pulling apart one data release without rushing. So if you've gotten value from the show, that's the place. Buy me a coffee dot com slash fexingo. Luna: Alright, back to the puzzle. So openings go up, hires don't follow — what gives? Lucas: I think there are two forces at play. One is a mismatch — the skills or location of available workers don't line up with where the openings are. The other is that employers may be posting roles they're not truly desperate to fill, just testing the market. Luna: That second one is interesting. Companies might be window-shopping, not buying. Because if they really needed someone, they'd raise wages or loosen requirements. Lucas: Right. And speaking of wages, average hourly earnings are up to $37.50, growing about 4% year-over-year. So wages are rising, but not at a pace that signals a bidding war. That suggests the labor market is tight, but not overheating. Luna: And the quits rate — that's been falling. If workers were confident, they'd be quitting to find better jobs. But quits are down. So maybe they're staying put because they're uncertain. Lucas: Exactly. The quits rate is often a better measure of worker confidence than openings. When people quit, they usually have another job lined up. So low quits suggests workers aren't seeing better opportunities, or they're nervous about the economy. Luna: And that's consistent with the unemployment rate holding at 4.3%. Not terrible, but not the 3.5% we saw a couple years ago. Lucas: Right. So the labor market is cooling, but not collapsing. And that puts the Fed in a tough spot. They're holding rates at 3.63%, with inflation still above 4%. They want to see the labor market soften to ease wage pressure, but they don't want to tip into recession. Luna: So what does this mean for the Fed's next move? The bond market seems to be pricing in a cut later this year. The 10-year breakeven is at 2.25%, down a bit, which suggests inflation expectations are anchored. Lucas: Yeah, breakevens are actually pretty calm. The market doesn't expect inflation to spiral. But the Fed has said they need to see sustained progress. A one-month jump in openings doesn't change the trend. Chairman Warsh just had his first meeting, and the statement emphasized patience. Luna: So patience. But with real GDP growth at 1.6% annualized, and the economy chugging along, maybe they can afford to wait. Lucas: I think that's the base case. The economy is growing, jobs are being added — we added 172,000 nonfarm payrolls in May. That's solid. Not booming, but solid. So the Fed can hold steady and see if inflation drifts lower. Luna: But if openings stay high and hiring stays low, that could eventually lead to wage pressure. If employers can't find workers, they'll have to pay more. And that feeds into services inflation. Lucas: That's the risk. The JOLTS data is a lagging indicator, but it gives us a window into how tight the labor market really is. Right now, it's sending mixed signals. Openings say tight, hires say not so tight. Luna: One thing that stands out to me is the regional variation. I saw a headline about Nevada — struggling to find a job? Try Nevada. That suggests some states are booming while others are not. Lucas: Yeah, the national numbers hide a lot. Nevada's hospitality sector is hiring like crazy. But manufacturing in the Midwest might be soft. So the aggregate picture can look okay while individual experiences differ. Luna: And that's important for the Fed. They look at national data, but they also hear from business contacts. If the labor market is uneven, that might reinforce their wait and see approach. Lucas: Absolutely. So let's pull this together. Job openings surged to 7.6 million. Hires didn't follow. Quits are low. Wages are growing moderately. The unemployment rate is 4.3%. And the Fed is on hold. What does this all mean for the average person? Luna: I think it means the job market is still decent, but not as hot as it was. If you're looking for a job, you might have to apply to more places, but there are opportunities. If you're employed, it's a good time to stay put and maybe ask for a raise, but don't quit without a backup. Lucas: That's sensible. And for investors, the labor market data is key to guessing the Fed's timing. If job openings start falling and hires pick up, that could signal a rebalancing. If openings stay high, the Fed might worry about wage inflation. Luna: So we watch the next JOLTS release. But for now, the takeaway is that the labor market is in a weird place — tight on the surface, but with underlying softness. Lucas: Yeah, I think that's right. And that's the kind of nuance that gets lost in the headline numbers. The economy is rarely as simple as 'good' or 'bad.' It's always a mix. Luna: And that's why we do this show. All right, thanks for listening.