JPMorgan Econ FI-US All signs point to slower job gains in 2024-106430450

MuratTasci(1-212)622-0288NorthAmericaEconomicResearchJPMORGANmurat.tasci@jpmchase.comJ.P.MorganSecuritiesLLCGlobalDataWatch09February2024US:Allsignspointtoslowermentforbusinesses.Moreover,itlookedliketheUSecono-jobgainsin2024myhadalreadyrecoupedallthejobslostduringthepandemicbyearlyfall2022.Intheend,businessesaddedabout3.0mn•Stronger-than-expectedGDPgrowthin2023keptnewjobslastyear.Whatexplainsthissurprisingresilience?labordemandhighFirst,theoveralleconomyprovedtobemoreresilienttohigherinterestratesthanweanticipatedayearago.Infact,•Supplysidesurprisesmadeitpossibletoaccommodatethepayrollgrowthin2023wasinlinewithwhatonewouldhaveexpectedgiventhisperformance(Figure2).Aswethatdemandarguedinour2024USOutlook,wedonotthinkthisperfor-mancewasduetoachangingdynamicinthemonetarytrans-•Cyclicaltailwindsfromtheaggregateemploymentmissionmechanism.Instead,manyhouseholdsandbusiness-esseemtohavebeenwellinsulatedfromhigherinterestratescyclehavelikelysubsidedsofar,havinglockedinlowratesduringthepandemic.More-over,monetarytighteninghasbeenoffsetpartlybythefiscal•Thefewsectorsthatledthepayrollgainsin2023willside.Wealsothinkthatthefulleffectsoftherestrictivepolicyhavenotbeenfeltyet.Asaresult,theannualgrowthinrealhavelessroomin2024GDPfor2023wasaround2.5%,astepupfromthe1.9%pacein2022.ThatwasasignificantlystrongerperformanceThepand...