Economists typically view consumer consumption as primarily driven by labor-market conditions — as long as people have a job, they keep spending. There’s evidence the job market, until now remarkably robust, is cooling too. Wages and salaries rose just 0.1% in October, according to Thursday’s data, marking the smallest advance this year. Separate data show out-of-work Americans are having a tougher time securing another job, with continuing weekly jobless claims climbing to a two-year high.
The closely-watched government jobs report out next Friday is projected to show a 4% rise in average hourly earnings versus a year earlier, which would amount to the smallest annual increase since mid-2021.
Though the economy is decelerating, few forecasters see a crash ahead. Growth is seen moderating to 1.1% in the fourth quarter before sliding to as low as 0.2% in the second quarter of 2024, according to median estimates in a Bloomberg survey.
“Certainly things are moderating, but we continue to see signs of forward momentum and progress,” Heather Boushey, a member of President Joe Biden’s Council of Economic Advisers, said in a phone interview. “We couldn’t have those blockbuster paces going on forever. We really needed things to stabilize.”
The economy has been resilient so far. That could be changing heading into 2024, according to Veronica Clark, an economist at Citigroup Inc.
“If we’re in a recession six months from now, which we believe we will be, we could look back on this period and say this was the earliest sign of it,” she said.
This article was provided by Bloomberg News.