Goldman Sachs Global Economics Analyst (And employment relative to the working-age population remains below the pre-pandemic level.) Exhibit 6: Post-Pandemic Labor Market Overheating Showed Up Not in Excessive Employment but in Unprecedented Job Openings Percent of labor force US Labor Demand Percent of labor force 106 106 104 Job Openings 104 Household Employment 102 102 100 100 98 98 96 96 94 94 92 92 90 90 88 88 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: Haver Analytics, Goldman Sachs Global Investment Research Now, however, the environment looks very different. Demand has slowed, the pandemic has subsided, unemployment benefits have normalized, and excess savings are coming down. It is therefore not surprising that job openings and our jobs-workers gap—total labor demand minus total labor supply—are coming down quickly. Based on timely job openings measures from Linkup and Indeed, we estimate that the jobs-workers gap has declined from a peak of nearly 6 million to just over 4 million, nearly half of the way to the 2mn level required to slow wage growth to a rate compatible with the inflation target (Exhibit 7, left panel). Partly because of the reduction in the jobs-workers gap, timely measures of nominal wage growth, i.e. composition-adjusted average hourly earnings and our monthly wage survey composite, have slowed to levels consistent with 4½% wage growth (Exhibit 7, right panel). 16 November 2022 6