Consumer and Firm Perceptions of the Aggregate Labor Market Conditions

Kudlyak, Marianna; Miskanic, Brandon E.

doi:10.24148/wp2024-28

Journal Article

Consumer and Firm Perceptions of the Aggregate Labor Market Conditions

Abstract: In the pre-pandemic period, measures of consumer labor market perceptions correlated well with the aggregate unemployment rate. However, for more than a year during the pandemic, consumers perceived labor markets as much tighter than the high aggregate unemployment rate implied. In contrast, there is no such a departure from the historic relation if we use the jobless unemployment rate-unemployment for reasons other than temporary layoffs-as a measure of labor market tightness. Using a measure of the firm labor market perceptions from the National Federation of Independent Business, we find that during the post-pandemic period, firms perceived labor market as being tighter than what consumers perceived, given the historic relation between the two series. Furthermore, despite the vacancy-unemployment ratio was at its historic high levels during the post-pandemic period, our measure of firm perceptions signaled that the labor market was even tighter. In June-July 2024, the relations between consumer and firm perceptions and between various measures of labor market tightness are back to its pre-pandemic patterns.

Keywords: consumers; firms; unemployment; recessions; temporary layoffs;

JEL Classification: E32; J63; J64;

https://doi.org/10.24148/wp2024-28