OUTLOOK 2023 LEADING ECONOMIC INDEX (6-MO % CHANGE) RECESSIONS 10% 5% fig. 0% 2-5% Leading -10% indicators point to more -15% 1958 1966 1974 1982 1990 1998 2006 2014 2022 slowdown Source: LPL Research, Conference Board 10/20/22 Even though investors are tempted workers [Fig. 3]. Investors should to say “this time is different,” we all watch these metrics throughout can take note of general principles 2023 as the economy leads to a about business cycles and the more balanced labor market. markets. The Fed has warned that the We expect the ratio of openings to current inflation fight will be painful, unemployed to fall as the economy so a dip into a recession should not be slows and firms cut their number of that surprising. job openings. Firms often quickly respond to a slowing economy: during Not enough READJUSTMENTS IN THE JOB the 2008 financial crisis, the number MARKET COULD LESSEN PAIN of openings fell by 50% in roughly 16 fig. workers to fill The Fed has repeatedly warned months, so this metric could revert 3job openings investors about the potential for pain quickly. The persistent problem of from the fight with inflation. That pain individuals out of the labor force is mostly likely associated with an has kept the labor market tight, but RATIO OF OPENINGS TO UNEMPLOYED RECESSIONS expected increase in unemployment a potential improvement in labor 2.0 as the job market cools from a slowing force participation in the prime age economy. The Job Openings and population (25–54 year olds) with Labor Turnover report was hardly on improved productivity would be a 1.5 center stage, until Fed Chair Jerome powerful remedy. And in terms of firms’ Powell used a press conference to struggle to find qualified workers, the 1.0 highlight the number of job openings coming year will reveal how firms are in the economy. The pandemic caused responding to current labor market these three metrics to become off conditions and any potential impact 0.5 balance: the ratio of openings to this may have on businesses. If the unemployed, the number of those not labor force grows back to its pre- 0 in the labor force, and the percent of pandemic trend, many of these near- 2002 2006 2010 2014 2018 2022 firms having difficulty finding qualified term conditions would improve. Source: LPL Research, Bureau of Labor Statistics, 11/07/22 04