Labor market at its limit: decline in full-time positions worries experts

Labor market at its limit: decline in full-time positions worries experts

The latest labor market data reveals an interesting development: while the results are better than expected, they also point to declining momentum in the economy. Loud Investing.com Around 200,000 new jobs per month are necessary to keep pace with population growth. A decline in consumer spending, which accounts for about 70% of economic growth, could trigger a recession.

Full-time employment plays a crucial role in sustainable consumption. Part-time jobs often do not provide the necessary income base to keep consumer behavior stable. What is alarming is the declining share of full-time positions in total employment, which has historically been seen as a warning signal of impending recessions. The trend towards part-time employment has been further increased since the turn of the millennium through automation and relocation of jobs.

Employment development and companies

Although former President Biden spoke of strong employment growth, the proportion of full-time employees has not yet reached pre-crisis levels. Although the current data dampens fears of an imminent recession, they also show declining wage dynamics. Companies are reluctant to cut full-time positions because good employees are difficult to replace. Cutting temporary staff is often the first step in reducing costs, while full-time positions usually come later.

Full-time employment remains at a low level, particularly in small companies. Employment has stagnated since the pandemic, despite initial confidence in the economic sector. Slow economic growth, expected to be less than 2% per year, poses major challenges for companies. Although the risk of a recession remains low, it could increase if consumption falls sharply.

Long-term perspectives and market developments

Long-term low returns in financial markets could reflect the reality of slow economic development. This is also shown by a study on income differences and economic growth in Germany, carried out by renowned economists such as Albig et al. was carried out. This study suggests that income distribution and associated disparities are critical to economic growth, which is particularly relevant given current data as shown in a study by the DIW weekly reports.

In summary, the labor market situation is a mixed bag. While there are positive indicators, trends in full-time employment and consumer spending trends warn of potential economic challenges in the future.