The United States, with a GDP of $27,974 billion, continues to lead the global economy in 2024, according to recent data. This economic powerhouse, along with China, Germany, Japan, and India, make up the top five economies worldwide. However, beneath the surface of these impressive figures, the labor market is experiencing significant churn, and a looming health workforce shortfall threatens to disrupt health systems globally.
The US economy, diverse and robust, is propelled by sectors such as services, manufacturing, finance, and technology. Despite this strength, the labor market is showing signs of weakness in certain sectors. Employment in manufacturing, transportation and warehousing, information, financial services, and professional and business services has seen little to no growth. Instead, job growth is concentrated in construction, leisure and hospitality, healthcare and social assistance, and state and local government, accounting for 76% of new jobs created.
Interestingly, even as employment growth accelerates, the number of intended job dismissals is on the rise. A survey by Challenger, Grey, and Christmas found that US-based companies intended to dismiss 90,309 workers in March, the highest number in 14 months. This trend reflects the dynamic nature of the job market, with jobs being eliminated and created simultaneously.
Despite a tight labor market, wage growth is decelerating. Average hourly wages in March were up 4.1% from a year earlier, the lowest increase since June 2021. However, wages are still rising faster than inflation, providing households with an increase in purchasing power.
Meanwhile, the World Health Organization estimates a projected shortfall of 10 million health workers by 2030, mostly in low- and lower-middle-income countries. This shortfall is attributed to chronic under-investment in education and training of health workers, and a mismatch between education and employment strategies in relation to health systems and population needs.
The US job openings rate was 5.3% in February for the third consecutive month, indicating a relatively strong job market. However, the job openings rate is down considerably from its peak of 7.4% in March 2022, suggesting that the current job market remains historically tight.
The Federal Reserve is closely monitoring these labor market trends. The strong job numbers suggest that the economy can thrive with relatively high interest rates. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said that he had been leaning toward two rate cuts this year, but now wonders if any are needed.
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