DOUGLAS COUNTY/Lawrence work force  –  ECONOMIC DATA

Provided by Mid America Regional Council – MARCH 2023 – March’s job growth was largely flat from February to March, showing signs that the job market is beginning to cool. Lawrence’s employment remained at 54,400, while last month saw a decline of 600 jobs. Overall growth over the first quarter of 2023 slowed relative to fourth quarter 2022, suggesting signs of a slowdown in hiring. The unemployment rate remained at 2.7% since last October, still below historical rates of 4% for full employment, a continuing sign of a very tight labor market.

Lawrence remains second in annual employment growth among nearby metros, second only to Manhattan. Lawrence grew 4% annually while Manhattan grew by 4.9%, Kansas City and Wichita by 2.7%, and Topeka by 2.1% annually.

March continued the slide in total private average hourly earnings, dropping to $24.86, down from a peak of $28.21 from September last year.

Recent economic data suggests that we may be seeing the beginnings of a slowdown in economic activity engineered by the Open Market Committee of the Federal Reserve Board. To slow inflation, the Federal Reserve has raised rates ten times since March 2022. Though national job growth has yet to slow substantially, locally both job and wage growth appear to have slowed. Nonetheless, the labor market remains tight, with a historically low 2.7% unemployment rate.

Recent instability in the banking sector is creating a more restrictive lending environment. Combined with a Federal Funds rate that is now between 5% and 5.25%, the Fed is now likely to take a more wait-and-see approach to monetary policy, even if they do not officially call it a “pause” in interest rate hikes. Given that monetary policy acts with long lags, the impact of these hikes is still in the process of unfolding. As a result, most economists believe the labor market will further soften and the unemployment rate will begin to tip upward, suggesting a mild recession later this year and into 2024.