Weekly Economic & Business Outlook

Macro Wellness Check for the U.S. Economy

As the end of 2024 approaches, it is a good time to assess current macroeconomic trends and what they mean for staffing as we close out the year. In good news, several key indicators suggest a positive trajectory: for one GDP growth has exceeded expectations, with the Conference Board revising their growth forecast up to 2.6% for FY 2024. Inflation is low and steadily moving towards optimal levels—with many experts already (if arguably prematurely) celebrating a successful soft landing. And lastly, job growth has continued, with employers adding 254,000 jobs in September, surpassing August’s lackluster report and helping to alleviate concerns about a faltering labor market.

Despite these encouraging signs, there remains a disconnect between positive data and negative perceptions that underscore the complexity of these trends. The Consumer Sentiment Index from the University of Michigan has yet to recover from the effects of the pandemic despite overall consumer spending having done so. Likewise, the OECD’s Business Confidence Index is around equal to the value recorded during the depths of the pandemic recession in the U.S. This cautious outlook among consumers and businesses highlights the need for sustained positive trends to build confidence to bolster economic performance.

Monetary policy may help foster the conditions needed for positive momentum to continue—The Conference Board estimates that interest rates will fall to 3.00–3.25% next year to the benefit of workers and businesses alike. However, the stimulating effects of lower interest rates will need time to permeate throughout the economy. If the current track holds it is possible that the staffing industry will rebound from its current lull at a faster cadence than other sectors, as the industry has in the past been among the first to see gains during economic upswings.

Firms Plan Investments as Rate Cut Takes Effect

With the Fed’s first rate cut arriving in September, questions turned to how companies would react, and what impact it might have on labor demand. A recent survey—conducted by RGP among 204 senior U.S. professionals who influence financial decisions at firms with $500M or more in revenue—sheds light on what firms may be planning in the wake of September’s half-point interest rate cut.
The Fed’s recent cuts have inspired investment, with most respondents expecting increased investment at their firm by the first half of 2025. Top priorities for investment include business process optimization and automation, digital transformation, and AI.

Where does employment fall as a priority? Skills gaps widened or stayed the same at two of five organizations surveyed, and nearly all respondents indicate their organization plans to invest in workforce strategy in 2025. This includes upskilling or reskilling employees (39%), engaging outside talent to fill skill gaps (24%), or boosting internal headcount (22%).

While leveraging AI is a priority at many organizations, two-thirds of respondents believe the technology will account for less than 10% of job elimination in the next two years, and nearly half believe it will spur 11 to 30% of job creation during that time.

These early survey results indicate that the Fed’s decision to cut the interest rate has driven plans for investment over the next six to eight months. Amid persistent skills gaps and with most organizations planning to invest in workforce strategy in 2025, staffing firms have an opportunity to provide key temporary staff or source hard-to-find talent for permanent roles.