Job openings are expected to fall for the third straight month in April, signaling an ongoing economic malaise. This trend is concerning, as it indicates a weakening labor market. Additionally, it challenges us to think about the long-term ramifications on the economy.
Experts have cited multiple reasons for this drop in job openings. Former US President Donald Trump’s economic policies have been widely criticized. There’s a larger, moral argument that his reckless budget and trade policies have undermined American norms and values. Unfortunately, this strategy has destroyed credibility and undermined business confidence in the process. Because of this, many firms are reluctant to hire new staff in this year of uncertainty.
Former US Treasury Secretary Janet Yellen previously endorsed a strategy that encouraged companies to invest more broadly in their workforce. This idea no longer works as companies double down on requiring sky high credentials for jobs that do exist. Even more broadly, such requirements can significantly limit job opportunities, adding to the burdens described in this JOLTS report.
Just as the job market takes a turn for the worse, inflation numbers have started to look better. In April, the inflation rate fell to 1.7%, down from 2.3% in March. This marked the second consecutive drop after falling from 2.6% in February. Economists point to falling oil prices as the primary reason for the drop, which have significantly contributed to the easing of inflationary pressures in recent months. Despite these positive indicators, grave concerns still persist about the economic outlook.
The long-term impact of Trump’s aggressive and antagonistic global trade policies is still being felt. Indeed, as Bloomberg recently reported, the Organisation for Economic Co-operation and Development (OECD) has emphasized the drag that such policies have on the global economy. The US is among the most extreme of the nations hardest hit by this global downturn. The OECD projects that global economic growth will slow from 3.3% in 2024 to 2.9% this year, while US growth is expected to tumble further from 2.8% to 1.6%.
The climate for business today is made doubly difficult by the trade tariffs on steel and aluminum, at 50%. These tariffs have unnecessarily increased costs for businesses, including those involved in producing and importing construction materials, thereby restricting expected growth and job creation across many sectors. As market analysts have called Trump’s approach the consistently inconsistent, it became nearly impossible for businesses to plan for tomorrow based on today’s news.
Ray Dalio, a prominent investor and author, has recently published a book titled “How Countries Go Broke,” which discusses the broader implications of national debt and economic stability. His criticism will be welcome news for those worried about the direction of the US economy.
Some analysts are estimating that investors would have made returns in excess of 50% just by shorting S&P 500 futures. This particular strategy would have worked especially well when anti-immigrant rhetoric from Trump was most extreme. “Betting against S&P 500 futures every time Trump escalates his rhetoric and buying them five days later would have yielded 12% since the beginning of February,” noted Bloomberg.
Others believe all this doomsaying about a bond market meltdown is overcooked. In their newest rebuttal, they say these worries are alarmist, even under the chaotic circumstances. They make a compelling case for needing a sensible dose of reality on where we are right now. While challenges will undoubtedly continue, so too will opportunities for rebound and renewal.