The U.S. economy added only 332,000 private-sector jobs in the second quarter of 2023, much lower than was initially reported by the Bureau of Labor Statistics (BLS) for the April-to-June 2023 period.
In the three months that ended in June 2023, gross job gains from opening and expanding private companies totaled 8.1 million, up 79,000 from the previous quarter. Gross employment losses from closing and contracting establishments were 7.8 million, up 723,000 from the previous quarter.
Recent labor figures contrast with what the federal agency originally published in the monthly job reports—the nonfarm payrolls report—early last year.
After revisions are factored into the calculations, the nonfarm payrolls report showed that 603,000 new jobs were created. When only private-sector employment is assessed, the BLS confirmed that 520,000 positions were added to the U.S. economy.
Following the BEDS updates, this means that as many as 271,000 jobs disappeared from U.S. government data in the second quarter. Or, based on private employment, 181,000 positions were erased.
Government Employment Trends
Last year, the U.S. economy officially produced about 2.7 million new jobs.Government payrolls have steadily increased since World War II. There have been periods of notable declines, particularly in the first half of the 1980s and in the years following the Great Recession (2008–09).
Still, it has been mainly on an upward trajectory, reaching a record high in December 2023.
By combining the three sectors, roughly half of all new jobs in 2023 were from the government.
“The administration’s bet is that government spending on welfare and entitlements can continue to power the U.S. labor market even as job growth in manufacturing, tech, retail, and other industries flags,” she wrote.
‘Demographic Cliff’
In addition to the BEDS numbers, the BLS released the December 2023 Job Openings and Labor Turnover Summary (JOLTS) data.The latest numbers highlight that job openings increased by 101,000 to 9.026 million, while job “quits” fell by 131,000 to 3.392 million.
On the surface, this is a positive indicator for the U.S. economy in the year ahead. However, labor demand has been too high for too long and signals that “these workers don’t exist,” according to Andrew Crapuchettes, CEO of job board RedBalloon.
“Our job market has had well over 8 million job openings for far too long. The average used to be between three and four million, but since the COVID-19 pandemic, demand has been well above the average in decades past,” he said in a statement.
“Unfortunately, these workers don’t exist—and won’t exist—for decades due to the demographic cliff we have fallen off of.
“The bottom line is that: economic growth without people growth will make the 2024 labor market the hardest in history.”
According to the January Freedom Economic Index, employers might also be adopting a wait-and-see approach to hiring and firing.
January Jobs Report
Kicking off 2024, the U.S. economy is expected to have created 180,000 new jobs, and the unemployment rate is forecast to creep up to 3.8 percent.“That would be an acceleration over the 217,000 payroll gains we saw in December and mark the strongest month for private payrolls since May 2023,” the group said in a report.
“The upside surprise would be due to the seasonal adjustment of the data.”
Preston Caldwell, chief economist at Morningstar, expects the labor market to slow in the first half of 2024.
“The trend that started in mid-2021 has paused temporarily, which is not surprising given the strength of gross domestic product [GDP] growth in recent quarters. However, we expect the slowdown will resume in the first half of 2024 as GDP growth slows.”
Over the next 12 months, he noted, firms are expected to curb labor usage, trim billable employee hours, and reduce temporary employment.
