Curtis Dubay Curtis Dubay
Chief Economist, U.S Chamber of Commerce


December 02, 2022


Updated periodically, Economic Viewpoints provides a snapshot of the U.S. economy from the Economic Policy Division at the U.S. Chamber of Commerce.

Job Openings Fall Slightly in October

December 1, 2022

4.3 million job openings

There were 10.3 million job openings across the economy at the end of October. That is down 353,000 from September but still historically elevated.

Why it matters: There are now 4.3 million more job openings than unemployed workers. Businesses still struggle to find workers.

By the numbers:

  • Openings decreased in state and local government, excluding education (101,000); nondurable goods manufacturing (95,000); and federal government (61,000).
  • They increased in other services (76,000) and in finance and insurance (70,000).

Big picture: The cooling economy is causing openings to drop, but not by much. The still-tight labor market is a big part of “second-hand pessimism.” Businesses say the economy is poor, but they’re still hiring as if it’s strong.

Similarly, workers remain confident they can leave their jobs and find new ones, even as their confidence in the economy is low.

  • 4 million people quit their jobs in October, down from the 4.45 million all-time high in March but still historically high.

Bottom line: The slowing economy should cause the labor market to cool eventually. It is a key metric the Fed will watch to evaluate whether their anti-inflationary policies are working. But so far, the unique post-COVID labor market is showing no signs of slowing.

What to Watch in November Jobs Report

November 29, 2022

labor force chart

The November jobs report will come out on Friday. Most people will be watching the overall jobs created figure, which is expected to be 200,000 jobs added to the economy. But our main labor market problem is not job creation. It’s a lack of workers to fill open jobs.

Why it matters: In our current environment, it’s more constructive to look at the labor force numbers to determine if more people are coming back into the workforce.

By the numbers: There are three key labor force data points to look at:

  • Labor Force Level: The number of workers in the labor force right now. That figure is about the same as it was pre-COVID. It has recovered substantially from an enormous decline during the height of the pandemic. But had COVID never occurred, it would be significantly higher than it is now.
  • Labor Force Participation Rate: The ratio of active labor force participants compared to the size of the population. The participation rate is lagging badly. As of October, it is 62.2%. In February 2020, it was 63.4%. A 1.2 percentage point difference may not seem large, but it is enormous. It works out to millions of workers missing from the labor force.
  • Missing Workers: The number of workers that would be in the labor force if the participation rate was the same as pre-COVID. As of October, it was over 3 million missing workers.

Bottom line: The job market will remain tight and continue exerting upward pressure on inflation until more workers enter the labor force. Look to these data points to see if we made progress last month.

Gas Prices Higher This Thanksgiving 2021

November 22, 2022

gas prices high

According to the Farm Bureau, the cost of Thanksgiving dinner is more expensive this year – $64.05 for a group of ten compared to $53.31 last year.

  • For those traveling instead of cooking, gas prices are up too.

Why it matters: Gas and food prices continue to take a bite out of families’ budgets.

By the numbers: A gallon of gas is $3.65 on average across the country this week, up from $3.40 at this time last year. Gas prices have come down from recent record highs.

Be smart: Inflation is high, 7.7% on an annual basis, but it is even higher for necessities like gas and food.

  • Groceries are up 12.5% from last year.
  • Gas is up 17.5%.

Bottom line: Despite the pressure these higher prices are putting on consumers, they keep spending. For the economy, that’s something to be thankful for.

Consumers Keep Spending Faster than Inflation

November 17, 2022

retail sales rise in october

Retail sales – spending at retail stores and bars and restaurants – rose a surprising 1.3% in October.

Why it matters: That exceeded inflation handily. Prices rose 0.4% in October, so inflation-adjusted retail sales rose a hardy 0.9%.

Be smart: Consumers are still spending even though inflation continues to drive prices higher, stretching budgets.

  • They can keep pace with inflation, even though their inflation-adjusted wages are falling by drawing down savings and using their credit cards, which they had paid down during the pandemic.

Looking ahead: How long this unique scenario can continue is hard to gauge.

  • Savings are not uniformly distributed, so we don’t know if the people that have them are those that need them to support spending.
  • Similarly, we don’t know if the rise in credit is concentrated among those that are the most leveraged.

Bottom line: The situation could reverse quickly, but for now consumers’ surprising resilience is driving “second-hand pessimism,” which is the divergence between how consumers and businesses tell surveys they feel about the economy (bad) and how they’re acting (spending and investing).

Consumer Sentiment Falls

November 15, 2022

consumer sentiment down

Consumer Sentiment fell sharply in November. It hit an all-time low in June and had risen four straight months since then, albeit modestly.

Why it matters: The pronounced drop in sentiment is surprising because inflation moderated in October. With inflation being the main concern for consumers it would follow that their mood would improve, but that hasn’t happened.

Be smart: The economic data and behavior of consumers and businesses are not following expected patterns. Both consumers and businesses feel bad about the economy, yet consumers keep spending and businesses keep hiring, raising wages, and investing.

  • We’ve been calling this unique circumstance “second-hand pessimism” and consumers’ dark turn this month continues the confusing pattern.

Looking ahead: Updated spending data, which we’ll get later this week, will tell us more about whether this phenomenon continues, or whether spending is finally slowing to match the poor mood of consumers.

  • There has been no sign that’s the case yet, so the confusing split between sentiment and actions is likely to continue. That would be good news for the economy because actions speak louder than words when it comes to growth.

Jobs Added in October, But Labor Force Declines

November 8, 2022

Labor Force Participation

The economy added 261,000 jobs in October. Expectations were for about 200,000, so we exceeded them. That’s the good news.

The bad news is that labor force participation is still lagging badly, even as we keep adding jobs and have so many unfilled positions.

  • The labor force shrunk by 22,000 in October. We are 84,000 above the pre-pandemic participation level, but the level has dropped for two straight months now.

Why it matters: If we had the same participation rate now as pre-pandemic, there would be 3.05 million more workers in the labor force.

Be smart: Also concerning is which survey in the jobs report to rely on. The 261,000 jobs gain comes from a survey of businesses. That’s usually where we get the job creation number.

  • But the households survey showed employment down by 300,000. The surveys are pointing in different directions, which is unusual.

Other key data points: 

  • Wages rose 0.4% from September and 4.7% annually from October 2021.
  • Education and health services added 79,000 jobs; professional business services 39,000; leisure and hospitality 35,000; manufacturing 32,000; and wholesale and retail trade 22,000.
  • No industries lost jobs, but mining and logging was unchanged.

Bottom line: Future revisions will shed more light. For now, it’s best to be happy with the jobs added but not be overly optimistic about what it means for the economy’s direction.

Job Openings Rose Again in September

November 3, 2022

Job openings were 10.7 million at the end of September. That is surprisingly up 437,000 from August when openings were 10.3 million.

Why it matters: The worker shortage is not easing; it is worsening. There are 5 million more job openings than unemployed workers.

  • The largest increases in job openings were in accommodation and food services (215,000); health care and social assistance (115,000); and transportation, warehousing, and utilities (111,000).
  • The number of job openings decreased in wholesale trade (104,000) and in finance and insurance (83,000).

Be smart: A cooling economy would ordinarily cause businesses to cut back on their job postings, as they did in August. But August’s drop in postings is an outlier as openings rebounded in September.

Hiring and quits remained at roughly the same levels as in August. So businesses are still adding workers, and workers are still confident they can quit their current jobs and find better ones easily.

  • The quits rate was 2.7% in September. That is just below the all-time high rate of 3%.
  • 4.1 million people quit their jobs in September, down from the 4.45 million all-time high in March but still historically high.

Bottom Line: The still-strong labor market is a big part of the “second-hand pessimism” narrative of the current state of the economy. Businesses say the economy is poor, but they’re still hiring as if it’s strong.

Income and Spending Up in September

November 1, 2022

Income and spending rose more than inflation in September.

  • Income rose 0.4%, and wages and salaries rose 0.6%. Inflation was 0.3% in September, so both rose above still-high inflation.
  • Spending increased a strong 0.6%, or 0.3% after adjusting for inflation.

Why it matters: These are strong results and give another data point in favor of second-hand pessimism. The perception is that the economy is slowing (and it is), but consumers are still earning and spending. Their actions may keep the economy from a steeper decline.

Be smart: Spending growth (after accounting for inflation) outpaced inflation-adjusted income growth. It was able to do that because of accumulated savings.

  • Savings were positive in September but well below pre-pandemic levels. Consumers are spending down their pandemic savings accumulations to keep spending up.
  • At its peak, pandemic savings were approximately $2.7 trillion. That is now closer to $2.1 trillion. So they’ve spent roughly $600 billion of their savings this year to keep pace with inflation.
  • That amount will continue to dwindle as inflation remains high.

Bottom line: Consumers’ savings could allow their spending to keep up with inflation and keep pessimism second-hand. But that won’t last forever.

The Economy Grew 2.6% in Q3

October 27, 2022

The economy grew 2.6% in the 3rd quarter (July – September). We estimated growth of 2.1%, so the economy slightly outperformed our expectations.  

Why it matters: The strong 3rd quarter means the description of the current economic situation as reflecting second-hand pessimism is still accurate. 

  • Consumers and businesses feel bad about the economy when surveyed, but the underlying data, reflecting their actual spending activity, tell a more positive story.

Be smart: The strong growth in Q3 is a reversal from Q1 and Q2 when the economy contracted by 1.6% and 0.6% respectively.

  • If the first half of the year is declared a recession, the expansion in Q3 means it ended in July. (There is still a 50/50 chance of a recession going forward.)

By the numbers: Growth came from gains in personal spending, business investment, trade flows, and government spending:

  • Personal spending rose 1.4%. Spending on goods was down (autos were a big weight), but growth in services spending, particularly healthcare and “other” services, more than made up for that loss.
  • Residential investment, unsurprisingly, fell sharply by more than 26%. The housing market is slowing rapidly as interest rates rise.
  • Business investment was robust though, rising 3.7% on the back of spending on equipment and intellectual property.
  • Inventories fell as businesses continue to draw down their existing stocks and supply chain issues remain a problem.
  • Exports rose more than 14% and imports fell 7%, so net trade flows added substantially to growth in the quarter.
  • Government spending added to GDP as well, especially large increases in defense spending.

Housing Prices Fall in August

October 25, 2022

The latest data shows the housing market is struggling. Prices fell 1.1% nationwide in August.

  • On an annual basis, prices are still up 13% annually.
  • That is down from recent highs. They were up almost 16% annually in July and 21% annually earlier this year.

Why it matters: Housing prices are falling because interest rates are rising and cooling demand.

  • The National Association of Home Builders survey of homebuilders has fallen steeply in recent months, for instance, showing a substantial decline in demand for new homes.

Be smart: We are not in the same situation as we were in 2006 and 2007. Homeowners in general have much more equity than in that period and fewer of them have adjustable-rate mortgages.

Bottom line: The housing market is not as hot as it was a few months ago. That’s bad news if you waited to sell until now, but it is not like the housing bubble in 2007.

Digging Deeper into Economic Pessimism

October 20, 2022

Second-hand pessimism is the developing watchword for our unique economic moment.

Why it matters: While consumers’ and businesses’ specific economic situations remain strong, they tell pollsters they feel pessimistic about the economy because there’s a general sense it is weak.

Case in point: Consumer sentiment is near a record low, even while consumers continue to spend on pace with inflation.

And: Businesses of all sizes, sectors, and industries feel pessimistic about the future of the economy. Yet, according to the Conference Board’s Survey of CEO Confidence:

  • 44% of CEOs expect to expand their workforce in the next 12 months
  • 85% expect to increase wages by 3% or more over the next year
  • 86% expect their capital budgets (amount to invest) to increase or remain the same over the next year

Be smart: These are not the actions one would expect when consumers and businesses tell surveyors the economy is bleak.

  • But: This doesn’t mean the economy is doing great, or that there aren’t risks going forward. The economy is doing all right but may very well weaken substantially in 2023.

Bottom line: Second-hand pessimism tells us that if and when the economy does soften, the downside might not be as painful as many fear.

Read more from the Chamber:

  • Economic Data: Comprehensive quantitative snapshots of business sectors and topics to help business and political leaders make informed decisions.
  • Workforce Data:Capturing the current state of the U.S. workforce.
  • Small Business Index: The MetLife & U.S. Chamber of Commerce Small Business Index is released on a quarterly basis and is compiled from 750 unique online interviews with small business owners and operators each quarter. The Index delivers a comprehensive quantitative snapshot of the small business sector as well as explores small business owners’ perspectives on the latest economic and business trends.
  • Middle Market Business Index:The survey panel consists of approximately 1,500 middle market executives and is designed to accurately reflect conditions in the middle market.

About the authors

Curtis Dubay

Curtis Dubay

Chief Economist, U.S Chamber of Commerce

Curtis Dubay is Chief Economist, Economic Policy Division at the U.S. Chamber of Commerce. He heads the Chamber’s research on the U.S. and global economies.

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