What 2024’s Economic Outlook Means for Hiring

What 2024’s Economic Outlook Means for Hiring

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By Han Nguyen

2023 was a year of economic uncertainty in the United States, bringing talks of a recession while consumers continued to adjust to higher prices and rising interest rates. Ultimately, the recession that experts were predicting didn’t come—so what does this mean for the economy in 2024? And how will it impact the workforce?

Experts Split on Recession; Slow Economic Growth Expected

Most economists surveyed by the National Association for Business Economics in December 2023 put the odds of a 2024 recession at 50 percent or less. The Congressional Budget Office also says the U.S. economy is on track to avoid a recession as inflation continues to normalize, predicting economic growth of 1.5 percent in 2024 before rebounding to 2.2 percent in 2025.

Others, however, aren’t so confident about avoiding a recession. Kathy Bostjancic, chief economist at Nationwide Mutual, said in an interview that the recession is just delayed but not completely removed. Economists at TD Securities are predicting a U.S. recession by midyear, as well.

Meanwhile, Bank of America is calling for a “soft landing” in 2024, rather than a recession, citing continued disinflation and projected midyear rate cuts from the Federal Reserve.

Related: Five Ways to Utilize Contingent Labor During an Economic Downturn

Hiring: A Look Back and What to Expect

Job growth held steady in 2023, helping to keep the U.S. unemployment rate below 4 percent. And despite there being fewer total U.S. job openings in 2023 compared to 2022, the economy still added jobs throughout the year, including 199,000 in November. If we get the “soft landing” that some experts are predicting, the unemployment rate may rise, but not to the extreme we’d see in a recession.

The Great Resignation, which peaked in late 2021 and 2022, came to an end in 2023, with more employees opting to stay put amid rising interest rates, slower wage growth, inflation, and widespread layoffs in the tech industry. This trend will likely carry into the new year—and with fewer workers looking for new opportunities, employers will continue to scale back the big pay raises and bonuses they had leveraged to keep workers around when employee turnover was at its highest.

Even facing slow economic growth, more chief executives of American companies are reporting plans to add workers in the new year, per the Business Roundtable’s Q4 2023 CEO Economic Outlook Survey. This is quite a turn from the third quarter of 2023, when more CEOs had indicated plans to fire workers.

Healthcare, government, and education are sectors where hiring has been strong in recent months and, according to Glassdoor economist Daniel Zhao, should remain strong in 2024.

Looking further into the future, the Bureau of Labor includes wind turbine service technicians, nurse practitioners, data scientists, statisticians, information security analysts, medical and health services managers, and software developers in its list of fastest growing occupations through 2032.

Industry Outlooks

As the new year kicks off, we’re keeping a close eye on some of the country’s key industries and what we can expect in the coming months.

  • Manufacturing: U.S. manufacturing jobs increased in November 2023, following the end of the United Auto Workers’ strike in October. The Institute for Supply Management reported that 2024 revenues are expected to increase in 15 of 18 manufacturing industries and 16 of 18 services-sector industries. Industry growth is also projected to accelerate in the second half of the year, with employment expected to grow by 2 percent in 2024.
  • Semiconductor: 83 percent of semiconductor leaders predict their company’s revenue will grow in the coming year, but less than half expect revenue growth of more than 10 percent, according to a KMPG and Global Semiconductor Alliance survey released in the final quarter of 2023. Demand for qualified talent remains an urgent issue for the industry, leading businesses to develop university partnerships, reinforce their employee value propositions, and entice candidates with remote and hybrid work positions.
  • Medical Device and Biotech: The workforce shortages that hospitals and health systems have been struggling to navigate haven’t affected life sciences companies in the same way. Experts at Deloitte say industry leaders are expressing less concern about the workforce and the economy heading into 2024, compared to last year. Instead, companies are more focused on how they’ll be impacted by drug pricing policies and generative AI.

Quick Hits: Workforce Trends in 2024

  • Remote Work: Remote work is seemingly here to stay, at least in some capacity. An August 2023 report found that 90 percent of companies plan to implement return-to-office policies by the end of 2024, but most organizations will likely allow a hybrid schedule that still allows employees to work from home at least a couple days each week.
  • Artificial Intelligence: AI will continue be a hot topic in 2024, as employers discern how they can use this technology ethically to increase efficiencies across their HR functions. Experts predict that AI will help automate everyday HR tasks, unclog recruiting pipelines, and expedite the hiring process.
  • Employee Well-being: Companies across the board are trying to do more with less, leading to higher levels of daily stress among workers. Employee well-being has dropped to its lowest level in 12 years, according to Guardian’s annual workplace benefits study. In 2024, managers should prioritize positive employee engagement and take steps to bolster team morale.

Related: 5 Ways to Foster Good Relationships to Keep Your Employees Happy

Related: Top Three Ways to Maintain Employee Engagement

This blog was authored by Han Nguyen.