Will 2023 Hold a Recession?
Welcome back to the Recruitonomics Newsletter! This week, the team digs into the odds of a recession in 2023, and what that might mean for recruiters. Read on for the latest insights!
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This Week on Recruitonomics:?
Why Economists Believe a Recession is Likely in 2023
A majority of economists forecast a recession for the U.S. in 2023 – 58 percent, according to a survey from the National Association for Business Economics (NABE) released earlier this week on March 27. The optimists, like labor economist Andrew Flowers, are a minority. 22 percent think a recession won’t begin until late 2024 or later. Why do most economists think there will be a recession this year? In the first part of a two article series, Andrew answers this question: in the face of inflationary pressures, economists distrust the Fed’s ability to cool down the economy – especially rip-roaringly strong consumer spending.?
Read the full article here.
What does this mean for recruiters??
A recession spells bad news for everyone in the U.S. – but there’s a high probability that this will be a shallow recession. Additionally, after how long it took to rebuild labor forces after the 2020 recession, companies may be more inclined to hold onto their workers – meaning less bad news for recruiters. Stay tuned for the second article in this small series, which will explain how the U.S. could avoid a recession in 2023.
BoE and Treasury at Odds About the UK’s Long-Run Capacity to Grow?
The short-run outlook for the U.K. economy is now looking brighter than last year. Business and consumer sentiment improved in the beginning of 2023 and so did the Bank of England (BoE)’s forecast for the economy. Instead of a shallow recession, the BoE now expects GDP to remain flat in the first half of 2023. However, there is a massive disagreement between U.K. policy makers. On the one hand, you have the BoE in control of monetary policy. And on the other hand, you have the Office for Budget Responsibility (OBR), the independent economic forecasters of the U.K. Treasury, representing fiscal policy. The monetary and fiscal policy makers do not see eye-to-eye about the U.K. economy’s long-run economic growth potential, with the BoE being much more pessimistic. Where do these discrepancies come from? They reflect diverging assumptions about employment, worker productivity, and business investment.
Read the full article here.
What does this mean for recruiters??
The Bank of England and the Office for Budget Responsibility have diverging opinions on how the labor market will fare in 2023. If trends align with the OBR’s outlook, recruiters will see positive growth in employment in the years to come. However, participation will remain relatively steady – meaning that there will still be recruitment challenges.
Recruiting Tips:?
We often talk about the importance of a shorter apply process, which cannot be overstated. In a still-tight labor market, shortening that process will give you more options, and perhaps broaden the pool enough to find the dream candidate. Shorten your apply process, get more candidates. Simple, right??
Okay, okay, I’m sure you have one more question: “how can I shorten my apply process?” It might feel like every question asked, every piece of information, is essential to understanding the person applying to your position. But I promise you, there are some easy ways to shorten the apply process without making sacrifices. Read Appcast’s latest blog “How to Shorten Your Apply Process” for all the tips!
Recently on Recruitonomics:
The European Central Bank decided to raise interest rates by 50 basis points, despite the financial volatility that sprung up in the weeks before its decision. Throughout the tightening cycle, the fear has been that financial instability would be introduced before the inflation target was met. With that possibility very much on the table, the central bank still decided to stick to decreasing inflationary pressures. Forecasters fear that these hikes will have the same effects as its hikes in 2008 – a recession. Germany, especially, is at risk – with high inflation and a shaky housing market.?
Read the full article here.
Last week, the U.S. Federal Reserve announced a 25 basis point interest rate hike, proving a commitment to inflation targets. However, the central bank also noted the potential effects of financial instability on inflationary pressures. A tightening on credit could curb business and consumer spending in the months to come, slowing stubborn inflation. However, it remains to be seen if this will occur. Despite the smaller hike, the Fed is still concerned with the tightness of the labor market and its effects on services inflation, which has refused to budge in recent months. The Fed is still intent on cooling labor market pressures, even as it signaled that rate hikes may soon pause.?
Read the full article here.
In 2022, the labor movement surged – strikes and unionization efforts were popping up across the country, even in traditionally non-organized industries. Public opinion on unions soared, media coverage was positive, and it almost seemed like a new dawn for organized labor. But, when union membership numbers came out earlier this year, it turns out the percent of unionized workers actually fell. However, public perception was right on one thing – there were more strikes. The official count of work stoppages from the Bureau of Labor Statistics (which only includes stoppages with greater than 1000 workers) hit 23 – the largest since 2019. When looking at labor actions with fewer workers, Cornell University finds that labor activity nearly doubled from 2021 to 2022. Unions were smaller but bolder last year – a trend that has followed tight labor markets into 2023.?
Read the full article here.
What Recruitonomics is Reading:
For years, the idea of artificial intelligence has fascinated (and maybe scared) the public – it has felt like the next frontier of the digital revolution but simultaneously, like a pipe dream. Now, AI seems to be everywhere — with fake images of the Pope, popping up daily in the news cycle, as an example. The advancement of this technology is occurring at a staggering pace, leading some to ask what the true capabilities of generative pre-trained transformers (GPTs) and other large language models (LLMs) are.?
In a new working paper, researchers at OpenAI – the company behind ChatGPT – and the University of Pennsylvania attempt to discover how many jobs are exposed to LLMs – and which are at risk of replacement by this new technology. By breaking a job down to its main tasks, the researchers find that 80% of workers belong to an occupation with at least 10% of its tasks exposed to LLMs – meaning that 10% of tasks could reasonably be performed by these emerging technologies. All wage levels were studied, but the highest wage levels are more exposed – in stark contrast to earlier bouts of automation in the manufacturing industry, for example. Most shocking, 19% of workers are in an occupation where over 50% of tasks are exposed to LLMs. These positions include accountants, writers and authors, and mathematicians. Of course, this paper makes no assumptions about the timeline of adoption of GPT-4 and beyond, and so, the future relationship with these technologies is still unclear.?
?More Data & Insights:
Thank you for reading! Stay tuned for next week's Recruitonomics Newsletter and check out Recruitonomics.com for more data-driven insights.