February 24, 2025

Taylor St. Germain:
Hi everyone, my name is Taylor St. Germain with ITR Economics and welcome to this edition of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence and I wanted to provide an update on the labor market today, an update on some metrics that we’ve talked about in the past.

The last time we had a labor market discussion was back in November of 2024, so it’s been a few months and I wanted to provide an update. Now despite the challenges of the labor market, there has been some good news as of late in terms of continuing to see some loosening of that labor market. Now I want to be clear, the labor market is not weak. It is a little bit weaker than where it was just a few months ago, but the labor market is still not weak. It’s still a challenging market, it’s still a tight labor market. We’re just in a slightly better position as a result of some of the demand that’s fallen off, particularly on the industrial side of the economy.

There’s a caveat there though, because as many of you know, we’ve been talking about growth that’s returning to the industrial economy in 2025, but we’ll get to that. Let’s linger on the first point here. I’ve highlighted this ratio a number of times on the podcast here in the past. The ratio I want to highlight here is the number of unemployed persons per job opening. I have this discussion frequently with our ITR’s clients as we review their data in the upcoming year. I bring this metric up intentionally. For every one job opening, there is 0.904 people on the sidelines. If we were to rewind just six months ago for every one job opening, there was only about 0.6 people on the sidelines. So that number, that ratio being at 0.9 today rather than 0.6, which is where it was at six months ago, means there are more people available out there. Again, the caveat, there’s still not enough people on the sideline to fill all the open jobs. That ratio is not above one, but it’s better than where we were, especially if you’re looking to hire. That is the call to action that I have for everyone today.

The US industrial economy is bouncing off a low. Cap X business investment has hit an inflection point or will be within the next quarter and we’ll be bouncing off the low. So before we really see a lot of these data series picking up in terms of demand, If there is hiring you need to do for the upcoming rising trend that is going to characterize ’25 and ’26, do that now. The labor market is looser, slightly weaker, however you want to put it. But as this economy heats up into the second half of ’25 as we pass these inflection points, as GDP continues to soar to record highs in 2025 and 2026, hiring is going to become a lot more challenging again.

Now, again, I’m not minimizing the challenge that hiring still is today, retention still is today, but it’s better today than it’s going to be 12 to 18 months from now. Also, if we’re making moves and bringing on an additional capacity from a hiring from a people standpoint now, that is going to set us up for success in the second half of this year and in 2026, where we’re forecasting some record high level of activity, not just for the economy, but a lot of the businesses that we’re working with. Don’t wait until you’re too busy to be hiring. Now is the point in the cycle that you really want to focus on that.

I’m going to bring up a topic that’s covered a lot in politics. I want to remind you that we’re apolitical here at ITR. We have no political affiliation, and as far as I’m concerned, it doesn’t matter to me who anyone voted for out there. The topic is immigration. Now, there’s a harsh stance that we’re taking on immigration here in the United States. That’s really not, yes, there’s some differences with the Trump administration, but really over the course of the last decade, we’ve seen consistently about 1 million legal immigrants per year coming into the country. I’m referencing a 12 month moving total of a data set that’s called lawful permanent residents immigrating into the US. And it’s remained relatively flat, some years slightly more volatile than others, but around that 1 million mark.

So with 1 million legal immigrants coming into the country, we have 7 million job openings when you look at the total private job openings, 12 month moving average. Immigration is not solving our problems, folks. We didn’t expect it to solve our problems, regardless of who was elected this time. And it has not solved our problems in the past. I’m sure it would be nice for politicians to focus on immigration and improving immigration. We do need more good qualified people in this country. There is no doubt about that. But I don’t know about you all, I never assumed that the government’s going to make my life better.

And so as a result, take advantage of the slightly looser labor market now, do that hiring and don’t lose sight of the fact that we as businesses are going to need to find ways to offset this labor problem, particularly through automation, innovation, technology gains. Again, immigration is not going to solve this problem. It hasn’t in the past. The baby boomers continue to retire out of the workforce. You need to have a strategy to do more with less as we move forward over the next five years. That’s really what’s important. So look to driving efficiencies in your business. Look to take advantage of the slightly looser labor market now so that you’re ready to take on five consecutive years of record-setting GDP growth that we have forecasted out there for the US.

I hope you enjoyed this edition of TrendsTalk. We had a lot of great information coming your way and just remind everyone that on March 20th, we have a summit between our parent company, Crowe, and myself and several of my ITR colleagues where we’ll be discussing more of this legislation, how it may impact the economy, and what the supply chain is going to look like out there in the future. So a lot of topics we cover here on TrendsTalk we’ll be covering in that summit. Go to our website for more information there.

I’m Taylor St. Germain. Thanks for joining me on this edition of TrendsTalk. Please like and subscribe to Trends Talk wherever you listen to your podcast, and I look forward to seeing you on the next one. Take care for now.