RALEIGH, N.C. (WNCN) – Following Friday’s surprisingly strong jobs report, a North Carolina economist said the odds of the U.S. experiencing a recession this year are dropping.
The U.S. added 517,000 jobs in January, according to the Bureau of Labor Statistics, more than double what economists had projected. The unemployment rate dropped to 3.4 percent, a number not seen in more than 50 years.
“It gives me pause. And, it makes me think that if we do have an official recession, we won’t know actually until a year later,” said NC State economist Mike Walden. “I am lowering my odds of a recession and I would increase my odds that we could get to what’s called a soft landing.”
Walden said the Federal Reserve is likely to stay on its track of interest rate hikes, having increased its benchmark interest rate by a quarter percentage point earlier this week.
“It tells (the Fed), hey their job is not over. Although inflation has been moderating, now we’ve probably got more income by people spending more income because we have more people working and coming into the economy. So, I think we’re going to see further interest rate hikes,” said Walden. “I think what we may be seeing with this January report is what we’ve seen in many parts of the economy: COVID has changed the rules.”
He noted the labor force participation rate went up and could be a sign that more people may re-enter the workforce in the months ahead. He said some workers might have been motivated to seek work due to concerns of a potential recession.
“People who were sitting off on the sidelines who could be working but weren’t, some of them came back into the labor force,” he said. “We’ve never had, at least in my experience as a professional economist, which spans five decades, we’ve never had a situation going into a potential recession where we had so much job availability out there, unfilled jobs.”
The report comes at a time when many employers have continued to experience challenges in hiring workers.
The State of North Carolina has seen that problem exacerbated since the COVID-19 pandemic, as the vacancy rate in state jobs has soared above 20 percent.
Transportation Sec. Eric Boyette recently told CBS 17 his agency is trying a variety of ways to recruit people, including offering sign-on bonuses for the hardest positions to fill and beginning the recruitment process much earlier by talking with high school students at about potential opportunities after graduation.
“So, some of it is pay. But, I don’t think that’s the total. I really think it deals with environment and the flexibility and being able to have a better work environment,” he said. “We do have some remote work options. Trying to do things and make it more that environment. That’s the biggest thing for us that we’ve been really dedicated on making that true change.”
Rep. Jason Saine (R-Lincoln), a top budget writer in the state House of Representatives, said this will be an important issue in this year’s legislative session.
“I think it’s way past time to look at how we pay employees and the system that we use,” he said, highlighting the challenge in hiring people in IT in particular. “We’re competing with the likes of SAS and Epic Games and others that are just right around Raleigh that we have to compete with to get that talent pool.”
Walden said the January jobs report may offer some hope for employers.
“Don’t give up. Continue to advertise because what we may be seeing with this January report, hopefully, I think this would be great news, is the start of a trend where we see more people who have been on the sidelines coming back into the job market,” he said. “What they need to focus on is the people who could be working and for a variety of reasons are still outside the labor force.”
