(Bloomberg) — US labor markets are starting to erode for groups such as young adults who are typically most vulnerable to an economic downturn, according to new research by the Federal Reserve Bank of St. Louis.
Since the Fed began raising interest rates early this year, there’s been a drop in employment-to-population ratios for Americans in the 20-24 age group who aren’t enrolled in school, according to analysis by William Rodgers, director of the St. Louis Fed’s Institute for Economic Equity.
In the period between February and August, the decline was about 1.8 percentage points for that group overall, Rodgers wrote. Among Black and Latino people in the cohort, the drop was roughly three times bigger.
While overall employment has held up since the Fed started hiking rates to fight inflation, the analysis highlights disparities in US labor markets that are likely to widen as monetary policy gets tighter — potentially putting pressure on central bankers to ease up.
By the end of next year, the unemployment rate among out-of-school young adults could reach almost 12%, while for Black Americans in that group it could exceed 18%, according to projections by the St. Louis Fed.
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