There has been a flurry of recent economic news that is likely to significantly impact companies’ hiring plans for the second half of 2023.
The U.S. government’s most recent GDP report shows that the economy experienced robust growth of 2.4 percent on an annualized basis in the last quarter. This impressive growth rate has surpassed expectations and instilled confidence that the United States is not heading towards a recession.
There are more positive indicators to celebrate. Inflation has notably declined, as evidenced by last week’s report. Consumer attitudes have also improved, contributing to an overall positive economic outlook. Consumer spending remains robust and the economy is receiving a boost from new federal investments in infrastructure and the reshoring of manufacturing.
After a one month pause, the Federal Reserve did raise interest rates last week. However, Reserve Chair Jerome Powell expressed confidence in the diminishing risk of a recession. So far, the Fed seems to have found the sweet-spot in taming inflation without causing a recession.
Additionally, there are signs of moderation in wage growth, not only in the official figures but also in our industry. We are not seeing the dramatic growth in compensation packages we experienced in ‘21 & ‘22.
Wage growth has slowed, but it must be noted that the labor market remains very tight with a 3.6% unemployment rate. With all the positive economic news giving our clients’ more confidence to hire, we are seeing one major obstacle in the talent acquisition landscape.
As the economy has cooled a bit, we are seeing many companies revert back to a pre-COVID mindset, when candidates were plentiful. This has led to interview processes that are too lengthy, hiring managers being too selective, candidates withdrawing with many other options, etc. There is a serious disconnect between companies’ perception of the employment market and the reality.
Our message to our clients is clear: Examine your talent acquisition strategy, create a positive candidate experience, train your leaders on how to attract talent, streamline your interviews, and ensure your compensation packages are competitive.
If you would like help addressing the issues above, please contact me directly at Michael@KesterSearch.com.