Career Resources 2022 – Mid-year Update

Mid Year Update: Inflation, Interest Rates, the R word and the Labor Markets

We are recruiters, not economists, so we don’t know what is to come in the months or year ahead. We can only share with you what we see in the DC market, what we read and numbers from the Labor Department.

The DC Market: As has been the case for the last 18 months, demand for accountants & finance professionals greatly exceeds supply. It is most imbalanced at the staff, senior and accounting manger level.

Labor Markets – The June Numbers:

Unemployment

  • Nationally: 3.6% nearly a 50 year low
  • Washington DC Metro area: 3.3%

The US economy added 372,000 jobs in June, which is down slightly from the last 3 months. The largest job gains coming from healthcare and professional services (accountants, finance).

“The labor market is cooling from a red hot pace, but its far from going into a freeze”, said Sarah House, senior economist from Wells Fargo.

Inflation, Interest Rates, the R word and the impact on Labor

From the WSJ –

Economists surveyed by The Wall Street Journal have raised the probability of recession, now putting it at 44% in the next 12 months, compared to 28% in the Journal’s last survey in April and at 18% in January.

Economists see the federal-funds rate at roughly 3.3% at the end of this year, up from 2% in the survey two months ago. That implies at least three more increases of a half percentage point in 2022.

“We now believe the U.S. economy is headed for a mild recession in the coming months,” said Greg Daco, chief economist for EY-Parthenon, a consulting firm.

Economists expect unemployment to rise as the Fed raises rates, although they see it staying at relatively low levels by historical comparison. On average, they forecast unemployment rising from 3.6% in May to an average of 3.7% at the end of 2022 and 4.2% at the end of 2023.

Federal Reserve Bank of St. Louis President James Bullard said the economy appears on track for more expansion this year, and that the central bank must meet market expectations for rate rises as part of its effort to rein in inflation.

“U.S. labor markets remain robust, and output is expected to continue to expand through 2022,” Mr. Bullard said in materials for a presentation in Spain. But he added, “Risks remain substantial and stem from uncertainty around the Russia-Ukraine war and the possibility of a sharp slowdown in China.”

Summary

Unemployment in the DC metro area is 3.3% and among accountants is substantially less. Inflation and interest rates will cool the economy, but given the strong labor market, unemployment is projected to stay historically low.

The DC job market for accounting and finance professionals is supported by Government Contractors and Non Profits. Add the growing base of technology and financial service companies, the arrival of Amazon and Boeing, and we anticipate demand to remain strong.

On the supply side, the pandemic transitioned many out of the profession. More experienced professionals chose this time to retire, while many mid-career professionals have prioritized work and life arrangements over career aspirations. Enrollment in accounting programs nationwide has remained steady over the last 10 years at about 210,000 annually.

Economic factors may cool the market, but given the support of fixed demand and a flat supply of professionals, we expect the market to remain competitive for accounting and finance professionals.

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