From the local economy to the state of the job market, these are unparalleled times. These new reports paint a grim picture of recent college graduates and ominous economic signals. The unemployment rate among recent graduates jumped to 5.8% in March, the highest rate since July 2021. On the flip side, the underemployment rate has now skyrocketed to 41.2%. This is the worst it’s been since February 2022, a testament to the increasing number of new graduates trapped in non-degree jobs. These numbers paint a discouraging picture for young professionals who have just entered the workforce.
In the first quarter of 2023, the U.S. economy actually shrank by a very slight 0.3% on an annualized basis. This steep drop calls into question D.C.’s growth prospects moving forward as all signs point to a labor market that is starting to cool. Economists are forecasting an increase of 133,000 nonfarm payrolls in April. This is a dramatic drop from last month’s gain of 228,000. The Dow Jones consensus says this is a dangerous atmosphere, but it’s a sign that the big slowdown might already be happening.
Job openings have dropped, down to about 7.2 million. This is the lowest number since September 2024. In light of these developments, the unemployment rate is likely to stay fairly steady at about 4.2% or so. Average hourly earnings are forecasted to increase by 0.3% in April. This will amount to a 3.9% increase over last year. The average “reservation” wage has plummeted to $74,236. That’s almost 10% lower than its all-time high in November 2024.
The fall in the satisfaction with pay has been acute, hitting its lowest point since November 2021 of only 54.8%. It is this combination of underemployment and declining wage expectations that creates a dire portrait for aspiring new labor.
Citigroup is looking even more conservatively, at 105,000 net new jobs in April. Mark Zandi, chief economist at Moody’s Analytics, suggests that a jobs report reflecting payroll growth of around 150,000 would be viewed positively by the market.
“If it’s around 150,000 give or take, I think all will be forgiven,” – Mark Zandi
Zandi cautions that anything less than 100,000 might trigger panic from investors.
“If the number’s 100,000 or anything south of that, then I think I’d watch out,” – he
The impacts of these numbers go far beyond the bottom line. They could set the tone for continued fiscal policy uncertainty and market volatility. The announced federal layoffs so far have been an unsettling 281,452, further emphasizing the precariousness of today’s job market.
Even after these challenges, a number of economists continue to take a more rosy picture on the economic outlook. Zandi noted the room for optimism to find some stability in the middle of so much uncertainty.
“So I think we’ll end the week feeling OK, not great, but OK. Things aren’t falling apart.” – Mark Zandi