How Labor Shortages Restrain Economic Growth

What continues to hold back economic growth is a shortage of workers.

As long as there were workers available in the economy, it could grow quickly by increasing the number of people employed.

But as early as 2024, this source of growth had nearly dried up.

Uh, you can see that in the very low— low unemployment rate.

Naturally, economic growth has also become more subdued, so it can continue to grow through increased labor productivity.

As I said at the beginning, growth rates there remain low for now.

Yes, you can cite plenty of individual examples that suggest there are layoffs.

Yes, there are layoffs at companies in woodworking and ferrous metallurgy.

Major automakers periodically switched to a four-day workweek.

And layoffs and shutdowns are, of course, always very painful, but they are becoming less frequent.

The low point in the slowdown of demand and economic activity even in these industries was passed, in our assessment, early this year, in Q1.

Meanwhile, companies are still actively looking for new staff in nonferrous metallurgy, the chemical industry, pharmaceuticals, industrial construction, logistics, and trade.

In all these core industries, there are still more companies that say they don't have enough employees than those with enough workers or some who are underemployed.

What's happening now is a movement of workers from some companies and industries to others, where those workers are in greater demand.

This, by the way, is one of the main ways to boost productivity.