The U.S. economy will likely experience one final test of strength in the third quarter, since any prospective rate cuts from the Federal Reserve will not be felt until the fourth quarter. However, this trajectory would also bring GDP in step with temporary services employment, which has experienced significant deceleration over the past year.
This week, the U.S. Bureau of Economic Analysis will release its first estimates of economic growth for the second quarter of 2024. Consensus estimates expect that the U.S. economy expanded at an annualized rate of 1.9%, a modest improvement from 1.4% in the first quarter of this year and the slowest pace on record since the economy contracted during the first half of 2022. Underlying these forecasts is a slow but steady cooldown in consumption, driven by a depletion of pandemic-era savings, elevated interest rates, and softening wage growth. Alongside near-certain contractions within both residential and structures investment, consumption remains critical to steering the U.S. economy clear of a recession and maintaining the potential for a soft landing.
Yet, even if second-quarter estimates matched consensus expectations, it would still constitute a substantial departure from economic growth in previous years following the Covid-19 pandemic, as well as average growth during the last economic expansion from Q3 in 2009 to Q3 in 2019. Furthermore, the U.S. economy will likely experience one final test of strength in the third quarter, since any prospective rate cuts from the Federal Reserve will not be felt until the fourth quarter. However, this trajectory would also bring GDP in step with temporary services employment, which has experienced significant deceleration over the past year. This would suggest that the recent divergence between economic growth and temporary services employment was mostly propelled by extraordinary macroeconomic conditions in the aftermath of the pandemic that fueled the former’s robust acceleration. While such a scenario would not be ideal for the industry or economy at-large, it would affirm that temporary help services remains a vital bellwether for the trajectory of the U.S. economy.
Though CEO confidence remains slightly higher today than in parts of 2023, the immediate outlook for new labor demand is muted amid a murky economic outlook and elevated labor costs.
Two separate surveys of chief executive officers released recently found the same thing: CEOs are feeling slightly less rosy about business conditions than they have in recent months. Chief Executive Group’s CEO Confidence Index forecast of business conditions in 12 months was 6.6 out of 10, down from the 6.7 readings observed in May and June. Despite the decline, CEO confidence in future business conditions remains in good territory.
Nevertheless, the decline in confidence is visible in revenue and profit outlook for the coming year: 72% of CEOs expect profit growth over the next year, down from 76% in June. Likewise, 64% see profits growing, down from 71%.
Similarly, small- and midsize-business (SMB) CEOs surveyed for the Vistage CEO Confidence Index in early June also reported a decline, from 85.9 in Q1 to 83.3 in Q2. This marks the first decline after four straight quarters of growth. One factor driving this decline could be interest rates, as nearly two-thirds of SMB CEOs report feeling the effects of higher rates at their business. What does this mean for staffing companies and hiring? Chief Executive magazine reported a very slight reduction in hiring expectations, with 46% of CEOs expecting to increase headcounts in the next 12 months—down from 48% in June. SMB CEOs cited labor costs as a significant issue and the top source of inflation for their firms. While CEO confidence remains slightly higher today than in parts of 2023, the immediate outlook for new labor demand remains muted amid a murky economic outlook and elevated labor costs.
Paycheck Pain: 53% of U.S. Workers Feel Their Paycheck Is Not Keeping Up With Inflation More than half of U.S. workers (53%) feel their paychecks are not keeping up with the pace of inflation, according to a new ASA Workforce Monitor® study from the American Staffing Association and The Harris Poll. Nearly four in 10… More ›
