Weekly Economic & Business Outlook

June Inflation Numbers Better Than Expected

June’s inflation data released last week from BLS proved better than many economists were predicting. Core inflation (inflation minus food and energy) rose by 3.3%, the smallest 12-month increase since April of 2021, when the economy first experienced the spike in inflation that has stubbornly resisted the Fed’s price stabilizing mandate for several years. 

The June reading is good news for staffing firms as it provides solid evidence that inflation is now moving in the right direction after a bumpy start to 2024. While the Fed has made it abundantly clear that they are still waiting for “more good data” to strengthen the case for rate cuts, Fed Chair Jerome Powell has also expressed they understand the risk that leaving rates too high for too long would decrease economic growth, and thus are factoring that possibility in their future decision to cut rates or not. 

Should core inflation continue to move in the right direction over the following months we may very well see a potential rate cut as soon as September. In contrast to today’s more challenging business environment, staffing companies should expect higher demand for their services when interest rates are lowered, as that reduces the cost of borrowing which spurs businesses to grow—and crucially—to hire more workers. Until conditions improve, however, and that demand materializes, staffing firms should be focused on remaining dynamic conditions to weather the choppy waters affecting the industry.

Desk Workers Take Artificial Intelligence Initiative

Generative AI has continued to make waves among employees, and many aren’t waiting for their employers to dive in. In the 2024 Work Trend Index Annual Report, Microsoft and LinkedIn explored how workers are harnessing new tools that are available. The survey of 31,000 knowledge workers (employees who typically work at a desk) across 31 countries conducted in March 2024 found that 75% used AI at work. AI users report benefits that include saving time (90%), focusing on their most important work (85%), enabling creativity (84%), and enjoying their work more (83%).

However, while business leaders recognize the need to adopt AI to stay competitive (79%), they worry about being able to quantify productivity gains (59%). Additionally, six in 10 leaders worry their organization lacks a strategy for how they’ll implement AI.

Nevertheless, workers are taking the initiative, as 78% of AI users report bringing their own AI tools to work. The stakes are high for workers—three quarters (76%) believe they need AI skills to compete in the job market, and 69% believe it can help them get promoted faster.

For staffing firms, the data above suggest making a plan for adopting AI tools would be a worthy pursuit. Workers crave the time savings generative AI can bring and are not shy about adopting AI tools on their own. Developing AI policies at your firm may help workers find efficiencies while avoiding privacy and cybersecurity risks.