US Job Market Flashes Warning Signs Last Seen During 2020 Pandemic

The US job market is showing alarming deterioration. According to The Kobeissi Letter, government job openings dropped 51,000 in February to 701,000.

This marked the second-lowest reading since December 2020. Available government vacancies have fallen 524,000 since their 2022 peak and now sit at pre-pandemic levels.

In addition, federal government openings fell to 89,000, the second-lowest since the pandemic low. This level is also in line with readings from 2017 and 2018.

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“Meanwhile, the government hiring rate stood at 1.4%, one of the lowest levels since mid-2020 and matching the 2016 and 2017 lows. Government hiring is frozen,” the post read.

US Government Job Market Openings Decline Since 2022 Peak. Source: X/The Kobeissi Letter

Meanwhile, the private sector is shedding jobs at scale. Oracle reportedly laid off up to 30,000 employees on March 31. Amazon cut 16,000 corporate roles in January, and Block eliminated over 4,000 positions. These were just some of the many companies that made job cuts.

Consumer Sentiment Signals Trouble Ahead

In a separate post, The Kobeissi Letter suggested that forward-looking indicators” point to a further increase in US unemployment.” The Conference Board’s March survey showed that only 27.3% of consumers described jobs as “plentiful.”

This was a marginal uptick from 26.7% in February, but still well below the roughly 55% who felt that way in 2022. At the same time, 21.5% said jobs were “hard to find,” up from approximately 10% over the same period.

The gap between these two readings, known as the labor market differential, fell to just 5.8 points. That represents the lowest level since the 2020 pandemic.

The Kobeissi Letter noted that historically, this indicator has been one of the most reliable leading signals of rising unemployment.

“Furthermore, current levels in this indicator have only been seen prior to or during a US recession since the 1990s. The job market is set for even more weakness,” the analysts added.

US Consumer Confidence. Source: X/The Kobeissi Letter

With these indicators pointing in the same direction, the March jobs report will be closely watched to determine whether underlying deterioration is cyclical or marks a deeper shift.

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