GG News Bureau
New Delhi, 12th Jan. Unemployment is a significant problem that continues to pose a threat to the economic landscape of any country. Bharat, being one of the most populous countries in the world, has a diverse workforce, and changes in the unemployment rate have extensive consequences for the country’s growth and development.
According to latest official data, Bharat’s unemployment rate has also dropped to a one-year low, indicating a sustained upswing in economic activity and a steady post-pandemic recovery, analysts said.
According to the World Bank’s recent India Development Update (IDU), Bharat continues to demonstrate resilience in the face of a challenging global environment. According to the IDU, the Bank’s flagship half-yearly assessment on Bharat’s economy, despite considerable global challenges, Bharat was one of the fastest-growing major economies in FY 22/23, with a 7.2% growth rate. Bharat’s growth rate was the second highest among G20 countries and nearly doubled that of emerging market economies.
Whereas, the world’s greatest economy, the United States, has encountered numerous hurdles in 2023, and the difficulties do not appear to be abating even in the New Year. According to the Congressional Budget Office (CBO), millions of Americans may lose their jobs by 2024, and the country’s unemployment rate is predicted to rise from 3.9% to 4.4%.
On the other hand, the most current statistics suggest a ray of light, since Bharat’s unemployment rate has just fallen. According to the National Sample Survey (NSSO), the urban unemployment rate for people aged 15 and above fell to 6.8% in January-March 2023, down from 8.2% in the previous year. Despite the current economic problems, this good development signals a possible reversal in the job market. However, persistent vigilance and strong policy measures are required to promote long-term job development and ensure the nation’s future prosperity.
The US labour market will remain strong, although not as hot as it was in 2023
For nearly two years, the unemployment rate of the US has been below 4%, with the rate falling to 3.7% in November. However, hiring has slowed since the beginning of the year, with retail employment dropping by roughly 40,000 positions in the most recent jobs report, raising the question: How stable will the labour market be in 2024?
The expected increase in unemployment, will affect an estimated 7.4 million Americans in the labour market, will occur amid economic adjustments and policy moves, according to the CBO in its “Current View of the Economy From 2023 to 2025” report, as reported by Newsweek.
According to the non-partisan organisation, decreased consumer spending and a contraction in non-residential investment would cause the economy to stagnate, with real GDP growth decreasing from 2.5% this year to 1.5% in 2024.
Current jobless claims back up the CBO’s forecast, with over 202,000 new claims submitted in early December and approximately 1.87 million workers still claiming benefits, indicating a strengthening labour market.
Although the hiring rate has slowed, there have not been many layoffs, according to Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a New York-based think tank, which bodes well for next year if the Federal Reserve does not “overshoot” in its efforts to slow the economy. The Fed has paused its interest rate hike campaign, which began in March 2022, and experts predict the central bank will maintain rates stable when it meets on December 12-13.
Moody’s Analytics chief economist Mark Zandi believes the labour market will remain stable in 2024 and that employment growth would be resilient but sluggish.
According to the Bureau of Labour Statistics, earnings increased 4% over the previous year in November, but inflation has been dropping, with November’s report showing overall prices up 3.1% over a year, down from 3.2% in October.
According to Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley, the labour market’s health is largely determined by the performance of the Fed’s interest rate policies.
The home market will remain difficult to navigate
Changes in Federal Reserve policies and pent-up demand for housing will result in an even more competitive housing market in many places, as well as on-going hurdles for those looking for affordable homes and rentals. However, property prices in several U.S. regions, particularly in the Sun Belt, will stabilise. Prices will rise, albeit at a slower pace than in the past, as they recover from the excessive increases experienced earlier in the pandemic.
Selma Hepp, chief economist at CoreLogic, said, “This year when mortgage rates were slightly below 6%, we had quite a bit of surge in demand, so that’s telling me there’s quite a bit of pent-up demand out there but people are sitting on the side-lines and waiting out for mortgage rates to fall.”
Economy report projections
The CBO painted a grim depiction of the US economy in 2024, attributing the predicted decline to various reasons, including poorer consumer spending, lower non-residential investment, and lower exports. According to the research, these considerations would offset the benefits of increased government expenditure and lower taxation.
The estimates in the CBO report were consistent with actual labour market patterns, which showed signs of tightening in December.
According to the data, over 202,000 new unemployment benefit claims were made in the first week of the month, and approximately 1.87 million people were still collecting unemployment benefits, indicating a lack of job chances.
The Federal Reserve, while slightly more positive than the CBO, forecasted a similar prognosis for the economy in 2024. It forecast that real GDP growth would fall to 1.4% in 2024 before recovering in the years following. The Fed also forecasted an increase in the unemployment rate to 4.1% by the end of 2024, which was lower than the CBO’s forecast.
According to Jeffrey Buchbinder, chief equity strategist at LPL Financial, once the Fed starts cutting rates, the central bank has gone too far and a recession is either on the way or has already begun.
“The Fed will cut rates because it is concerned that monetary policy is too restrictive for a weakening economy,” Buchbinder told Newsweek before the Fed’s decision to keep interest rates unchanged at 5.25% to 5.5%. “The central bank’s goal remains a soft landing, and their spotty track record in achieving that goal does not mean a hard landing is necessarily in the cards.”
Economists believe that depending on the political developments next year, the economy could suffer. Although the general election is about a year away and the statistics could change dramatically between now and then, some polls show President Joe Biden and former President Donald Trump running neck and neck. Close results might cause political and social upheaval, as well as economic turbulence in 2024.
In addition to concerns about the economic implications of the presidential election, economists are concerned about the possibility of a government shutdown. Although it was avoided this year with the passage of a stopgap spending bill, Congress faces deadlines in January and February to collaborate on budget bills in order to avoid a shutdown.
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