Does current growth support slowing labor market?

One of the factors influencing future employment growth is current economic growth. If entrepreneurs see growing demand (e.g. growing GDP) – they will try to reflect this in their decisions regarding employment (i.e. increase in employment/or no layoffs). And GDP growth is still doing very well – see Figure 1.

Probably the most important for the companies’ decisions regarding employment are the last two quarters (of GDP growth), i.e. in Q1 2024 we had only +1.41%, but in Q2 2024 as much as +2.95% - which is quite healthy growth. Figures 2 and 3 show similar charts for the previous two recessions.

The latest reading of the Atlanta GDPNow model indicates a GDP growth in Q3 2024 of +2.47% - see Figure 4. The American consumer is still doing great... its real spending in Q3 is expected to increase by 3.52% - see Figure 5.

Interestingly, consumer spending after the publication of the August employment data (published on September 6th) increased the model's Q3 PCE growth forecast from 3.10% to 3.52%! - see Table 1.

All in all, the current real GDP growth (including the forecast for Q3) and the current real PCE growth (including the forecast for Q3) do not confirm a (future) slowdown in the labor market. Of course, this is just one of many factors that influence the actual decisions regarding the future increase/decrease in employment.