BELOW SUPERNAV drop zone ⇩

Could falling inflation trigger layoffs?

  • The overall economic picture seems solid, with the S&P 500 hitting record
  • Recent layoffs raise concerns about the potential impact on the job market
  • Most economists no longer forecast a recession in 2024
File - Shoppers buy vegetables in Buenos Aires, Argentina, Monday, Dec. 11, 2023. South America's second largest economy is suffering 143% annual inflation. (AP Photo/Natacha Pisarenko, File)

File – Shoppers buy vegetables in Buenos Aires, Argentina, Monday, Dec. 11, 2023. South America’s second largest economy is suffering 143% annual inflation. (AP Photo/Natacha Pisarenko, File)

MAIN AREA TOP drop zone ⇩

MAIN AREA TOP drop zone ⇩

ovp test

mLife Diagnostics LLC: Oral Fluid Drug Testing

Male shot by female at Shreveport apartment

Class to create biodiverse backyard

Rules for outbursts at Caddo School Board Meeting

Mortgage Calculator

This calculator helps you estimate your monthly mortgage payment. It adds up the loan payment (principal + interest), property tax, and insurance. The loan payment is spread out over the years of your loan term.

This is the total amount you're borrowing from the bank.
This is the yearly interest rate on your loan.
This is how long you'll take to repay the loan.
This is the yearly tax you pay on your property.
This is the yearly cost to insure your home.

Monthly Payment Breakdown

Principal and Interest: $

Property Tax: $

Homeowners Insurance: $

Total Estimated Monthly Payment: $

(NewsNation) — The recent slowdown in inflation is usually an indication of the economy getting back on its feet, but recent layoffs are leaving people to question whether this is true.

While easing inflation has provided relief to consumers and driven the stock market to new highs, some economists warn that it may lead to a downturn as corporate profit margins narrow.

The drop in price increases, coupled with softening consumer demand, could result in reduced pricing power for companies, affecting profit margins. Kathy Bostjancic, chief economist of Nationwide, told USA Today that falling profit margins have historically been accompanied by rising unemployment rates in past recessions.

Amid the uncertainty, the overall economic picture seems solid, with the S&P 500 hitting a record and consumer sentiment rebounding close to historical averages. Despite high interest rates and inflation, consumer spending has remained resilient, and most economists no longer forecast a recession in 2024.

However, recent layoffs announced by major companies such as TikTok, Macy’s, Google, Wayfair, Amazon, Citigroup and Universal Music have raised concerns about the potential impact on the job market. While just 10% of S&P 500 companies have reported fourth-quarter earnings, estimates suggest that profit margins for the entire season will average 10.9%, the lowest since late 2020.

The rapid rise in inflation in 2022, driven by pandemic-related spending sprees and supply chain bottlenecks, has since slowed but remains above the Federal Reserve’s 2% target at 3.4%. The past year saw companies coping with higher wholesale costs and borrowing expenses due to Fed rate hikes, leading to a streak of falling S&P 500 earnings, known as an earnings recession.

While some experts expect profit margins to rebound in the first half of this year, others express concerns about the potential for widespread layoffs. Ed Clissold of Ned Davis Research told USA Today that companies have been boosting profit margins by reducing shipping costs as supply chain issues resolve, a trend expected to continue in 2024.

Economists like Bostjancic worry that service companies, which make up 80% of the economy, may face declining sales alongside rising employee wages. Average hourly pay grew by 4.1% annually in December, and Bostjancic expects consumer spending to soften due to delayed effects of Fed rate hikes, credit card delinquencies and the depletion of pandemic-related savings, USA Today reported.

Despite differing opinions on the economic outlook, concerns linger about the potential for job losses in 2024. Bostjancic anticipates 1.6 million job losses this year, pushing the unemployment rate from 3.7% to 4.8%. The caveat, however, lies in the unusually strong productivity growth over the past year, driven by technology and other improvements. If this trend continues, it could mitigate the impact on businesses, allowing them to raise wages without significant blows to earnings or job cuts.

Business

Copyright 2024 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed

Site Settings Survey

 

MAIN AREA MIDDLE drop zone ⇩

Trending on NewsNation

MAIN AREA BOTTOM drop zone ⇩

tt

KC Chiefs parade shooting: 1 dead, 21 shot including 9 kids | Morning in America

Witness of Chiefs parade shooting describes suspect | Banfield

Kansas City Chiefs parade shooting: Mom of 2 dead, over 20 shot | Banfield

WWE star Ashley Massaro 'threatened' by board to keep quiet about alleged rape: Friend | Banfield

Friend of WWE star: Ashley Massaro 'spent hours' sobbing after alleged rape | Banfield

Fair

la

58°F Fair Feels like 58°
Wind
3 mph N
Humidity
35%
Sunrise
Sunset

Tonight

A clear sky. Low 51F. Winds light and variable.
51°F A clear sky. Low 51F. Winds light and variable.
Wind
4 mph N
Precip
0%
Sunset
Moon Phase
Waxing Gibbous