Will the US Year-End Employment and Consumption Boom Disappear... A Signal of Economic Slowdown?

Companies Likely to Significantly Cut Year-End Hiring
Consumer Spending in November-December Expected to Increase by Only 3-4%

U.S. consumers are expected to face a less robust year-end shopping season as they cut back on spending due to high prices and depleted savings. Companies that had significantly increased temporary hiring for the year-end rush plan to reduce their hiring scale considerably this year, and retailers are expected to see a sharp rise in inventory. Experts view this as one of the signs of economic cooling caused by the cumulative tightening effects of the U.S. Federal Reserve (Fed).

According to the Wall Street Journal (WSJ) on the 13th (local time), the National Retail Federation (NRF) expects seasonal temporary hires for this year’s year-end period to be between 345,000 and 445,000. This is about 40% less than the peak year-end hiring in 2021. Challenger Gray & Christmas, a U.S. employment information firm, reported that seasonal job postings this fall are at their lowest level in a decade.

Major department store brand Macy’s plans to reduce its year-end hiring by about 3,000 employees compared to last year. The U.S. Postal Service will hire only about one-third of the temporary workers it employed during the same period last year. Brian Devine, CEO of Columbus, a warehouse staffing company, said, "This holiday season’s hiring is completely different from previous years."

As high prices increase the burden on household spending, companies are analyzing that they need to reduce hiring even during the year-end peak season. Although inflation is slowing, it remains high, and the burden of loan repayments due to high interest rates has depleted excess savings, leading to expectations that the year-end economy will not be as strong as before.

According to the NRF and financial data research firm LESG Workspace, consumer spending during the year-end shopping season from November to December is expected to increase by only 3-4% compared to the same period last year. This is a sluggish trend compared to the 12.7% increase in consumer spending in 2021 and 5.4% last year. As consumers tighten their wallets, inventory is accumulating, especially among retailers. The department store and fashion sectors, including apparel, are experiencing more severe inventory problems compared to other industries. Jeff Bornino, head of North American operations at TMX Transform, a U.S. supply chain consultancy, said, "Currently, U.S. retailers face a situation where 15-20% of the products occupying store shelves must be discarded."

The cumulative tightening effects of the Fed are increasingly weighing on the economy, making it difficult to expect a year-end boom. Consumer inflation expectations have already begun to decline. According to the New York Federal Reserve Bank, consumers’ one-year ahead inflation expectations fell slightly from 3.7% in September to 3.6% in October. Three-year inflation expectations remained steady at 3%, while five-year inflation expectations dropped from 2.8% to 2.7%. The probability of unemployment next year rose by 0.3 percentage points to 12.7%.

The wage growth that had pushed inflation higher has also slowed. According to the Atlanta Fed, the wage growth rate for all U.S. workers in October this year was 5.8% year-over-year, down from 6.3% in January. The wage growth rate for the bottom 25% of earners slowed from 7.2% to 5.9% during the same period.

This content was produced with the assistance of AI translation services.