AI is Changing Employment Expectations in the U.S., Fed May Remain Cautious

On July 8, an independent research institution focused on semiconductors and AI stated that consumer confidence in the U.S. continues to weaken, but there are no significant signs of deterioration in the labor market that correspond to this trend. The voluntary resignation rate is typically the best indicator of consumer employment confidence, and currently, the number of voluntary resignations remains low, indicating that employees are not generally choosing to leave their jobs. However, consumers have begun to express concerns about future employment prospects, a sentiment not driven by short-term factors such as oil prices. In contrast, the consumer confidence index from the U.S. Chamber of Commerce aligns closely with the voluntary resignation rate, while the University of Michigan's consumer confidence index appears more pessimistic and shows weaker correlation.

From an industry perspective, over the past six months, job vacancies in the U.S. industrial, manufacturing, and import-related sectors have increased, while the significant decline in job vacancies is primarily concentrated in the information services sector. Artificial intelligence (AI) has first impacted industries with lower entry barriers, and concerns about AI replacing jobs have far exceeded the actual effects. This panic may further suppress wage growth and consumer spending, shifting the momentum of U.S. economic growth from consumption to investment, even though a large-scale wave of unemployment caused by AI has not yet occurred.

Regarding U.S. non-farm employment data, the low voluntary resignation rate and weak consumer confidence are not positive signals. However, against the backdrop of an aging population, the continued retirement of the baby boomer generation, coupled with immigration no longer significantly driving labor force growth, suggests that only about 55,000 new jobs may be needed to maintain the unemployment rate at a stable 4.3%. Following last month's addition of 172,000 jobs exceeding expectations, a decline in employment data this month remains the baseline scenario. Nevertheless, even if the market generally expects around 110,000 new jobs, this level may still exert downward pressure on the unemployment rate, causing the Fed to maintain a cautious stance without rushing to adjust monetary policy due to deteriorating consumer sentiment.