Just Right? The Goldilocks Economy and the Three Market Bears

Is the U.S. economy on the brink of a major downturn or is this a temporary blip? For the first time in two years, three major indexes touched bear market territory¹. Daily market fluctuations jolted investors who scrambled to interpret the meaning of tariffs, future Fed policy and a solid March jobs report. April 4th’s report of 228,000 new jobs should have been good news—but Wall Street’s “Liberation Day” indigestion dragged the Dow down 2,230 points, or 5.5%, by day’s end. While some investment banks raised their odds of a U.S. recession later this year, other investors speculated on the future of tariff policies and the wild swings they created.²

Just in case the tariff drama wasn’t enough, Fed chairman Powell’s “just right” approach to tame inflation without exacerbating unemployment also came under scrutiny. With daily market fluctuations and mixed signals from policymakers, investors and businesses were left guessing: What’s next for the economy? Are we already in a trade war with China and how long will it last? What will the Fed do? What does this mean for the labor market? This month Ciprani Consulting’s Hiring Journal offers our unique breakdown on where we’ve been, where we are and perhaps where we’re headed in the quest for the right teammates. 

Where’s the Talent?

When it comes to the current hunt for talent, the past is prologue. Economists have anticipated the looming battle for brainpower on the horizon for more than 20 years³. An aging population, declining labor force participation, and reduced net international migration were all foreseen factors long ago. Then the pandemic happened and weakened labor further. By October 2021, over 3 million Boomers opted for early retirement⁴, female workforce participation hit its lowest levels since the 1970s⁵ and 7.2 million men ages 25-50 have completely exited the workforce⁶. What these men are doing now, who knows?

As Americans got back to work, hiring became a major hurdle. Generous unemployment benefits, stimulus checks, bigger savings, and the booming gig economy made it tough to attract talent—and nearly impossible to keep them—even among cash-rich companies from the stimulus. The supply of jobs reached 12.1 million in March of 2022, at a time when quality talent was in high demand. Most employees preferred a virtual or hybrid work environment, if they were willing to return to work at all. Employers who wanted to revert to pre-pandemic norms found themselves resisting a shifting cultural landscape as the meaning of work had changed. Topics such as the Great Resignation, quiet quitting, ‘lazy girl jobs,’ and Bare Minimum Mondays became frequent conversation points around the water cooler, much to the chagrin of many employers. 

A Double-Sided Hiring Crunch

Since the glut of the post-pandemic boom, a clear shift in sentiment has begun to take shape. Unemployment remains historically low at 4.2%, and while the hiring crunch for talent continues to challenge many American companies, employers, employees, and job seekers alike now appear to be sharing the burden. The gap between job openings and job seekers continues to narrow since its peak in 2022 from 12.1 million to 7.6 million as of February. Even more striking perhaps was the sudden decline of 728,000 jobs from the January figures⁷. While the market has recouped a significant portion of its April losses recently, many Americans remain in a holding pattern, awaiting further developments. A recent piece entitled The Job Market is Frozen described the dilemma this way:

“The answer is that two seemingly incompatible things are happening in the job market at the same time. Even as the unemployment rate has hovered around 4 percent for more than three years, the pace of hiring has slowed to levels last seen shortly after the Great Recession, when the unemployment rate was nearly twice as high. The percentage of workers voluntarily quitting their jobs to find new ones, a signal of worker power and confidence, has fallen by a third from its peak in 2021 and 2022 to nearly its lowest level in a decade. The labor market is seemingly locked in place: Employees are staying put, and employers aren’t searching for new ones. And the dynamic appears to be affecting white-collar professions the most.”⁸ 

A thaw is unlikely to come anytime soon. While the broader economy may appear strong on paper, a closer examination of some sectors reveals softening and potential cause for alarm. More than half of all job gains from the past year came from only two sectors: health care and local government. Industries such as real estate, construction, retail, and leisure and hospitality “are down relative to prepandemic levels,”⁹ a rare occurrence not seen since the brief downturn in 2020 and, prior to that, in 2009.

There is Nothing New Under the Sun

All eyes now move to the April jobs report set for release this Friday, May 2nd. Whether we’re set for an unexpected shift in employment, the Federal Reserve’s next moves, or a further reassessment of tariff policies by the Trump administration—both toward China and globally—remains uncertain. But whether you’re bullish or bearish about the next six months, one thing is clear: employers will keep hiring, and people will need jobs, just like they do in every economy.

That’s not a bold prediction—it’s based on lived experience. At Ciprani Consulting, we grew rapidly during the hiring boom like a lot of companies and a few years later we were named by INC 5000 as one of the fastest-growing hiring firms of 2023. But hiring didn’t stop either in March of 2020—I know, because many of the clients we supported still work with us today. My crystal ball prediction for the next six months? Companies will still be looking to grow—filling key vacancies, developing new product lines that require support, and responding to seasonal demand. At the same time, employees will continue to seek new opportunities, often driven by those very same factors. In the market, as in hiring, what you avoid matters as much as what you choose.

References:

1.  Marketwatch. On April 3, the Nasdaq Composite fell by 962.82 points, or 5.82%, entering bear market territory. The DJIA dropped 2,231.07 points, or 5.50%, its third-largest point loss in history. The S&P 500 fell 322 points, or nearly 6%, marking its largest one-day slump since March 2020. These declines wiped out over $6 trillion in market value over two days. ↩︎
2. Reuters. JPMorgan Chase and Barclays have raised their recession odds for 2025, Deutsche Bank has adjusted its outlook to a more optimistic scenario, reflecting the complex and evolving nature of the U.S. economic landscape. ↩︎
3. The Economist. The Battle for Brainpower, 2006. ↩︎
4. Chamber of Commerce ↩︎
5. Chamber of Commerce ↩︎
6.  Business Insider ↩︎
7. Bureau of Labor and Statistics ↩︎
8. The Atlantic ↩︎
9.  The Atlantic ↩︎