The 2019 Economic Outlook Is Cloudy

Despite the disappointing end-of-year stock market performance, economic trends for much of 2018 suggested a robust economy. GDP growth was strong. Corporate profits reached impressive heights, especially in the technology sector. Americans last enjoyed such a prolonged period of low unemployment in the 1950s, with current unemployment reaching a level not seen since 1968.

But there are storm clouds on the horizon, and they’re becoming harder to ignore. GM is laying off workers and closing some plants. The on-again, off-again, maybe-on-again trade war with China is injecting uncertainty into already jittery markets. Workers are still not seeing appreciable growth in real wages.

The stock market is now currently experiencing a sharp correction, with the S&P 500 falling from it’s high on September 20th by almost 12% as of Wednesday. In response, the current administration has intensified  criticism of  the Federal Reserve as the Fed continues to raise interest rates to battle inflation. Exacerbating domestic stock market volatility is the poor performance of the Chinese economy over the past 12 months; where stocks fell 27% last year. This has a direct impact on major U.S. companies. For example,  Apple’s valuation dropped $57 billion after announcing that sales in China were slowing.

As 2019 gets underway, we wanted to take a look back to determine which jobs have been booming along with the economy. We also look ahead, highlighting those jobs that are likely to thrive despite the threat of the coming storm.

Tech: 2018’s economic trend setter

Much of the growth in the U.S. economy over the past year has been due to gains in the technology sector, a trend that was reflected in PayScale’s worker survey data. Of the 10 fastest growing jobs in our crowdsourced salary data, half were in technology professions. We saw the largest increase in full stack software developers in 2018, with a 572% increase in respondents compared to 2017. There is intense demand for highly skilled tech workers across industries. Unsurprisingly, the PayScale Index shows that salaries for tech workers are growing at a similarly fast clip, far outstripping wage growth for non-tech roles.

This demand for highly skilled workers has led to a critical labor supply shortage across the U.S. economy. Many employers feel the shortage of talent in STEM occupations  are placing an increased emphasis on employee experience in order to keep their high skill employees engaged and happy at work. Accordingly, we saw a 192% increase in employee engagement managers in 2018.

2018 also saw marked job growth for non-engineering roles in the tech industry, as well as tech-adjacent roles such as digital marketers. Social media roles continue to grow in importance across industries as brands fight for consumer attention. As a result, we saw a 294% increase in directors of community engagement in 2018. We also saw a 234% increase in lead graphic designers, reflecting organizations’ increasing demand for marketing assets. Because both of these roles are so critical to an organization’s success in 2018, it is unsurprising to see jobs in this field growing rapidly.

Tech to continue to grow in 2019

While job growth will not be limited to the tech industry in 2019, the proliferation and adoption of technology across all sectors of the economy means that tech jobs will continue to boom. We expect the highest demand job areas in 2019 will be:

  • Cloud computing
  • Artificial intelligence
  • Big data
  • Cyber security
  • Virtual / augmented reality
  • Digital marketing
  • Cannabis / marijuana

We expect that jobs related to cloud computing and artificial intelligence (AI) will see the largest growth in the coming year. Cloud computing has become an incredibly lucrative pillar of the modern economy and an area of intense focus for the world’s tech giants. Over the next year, cloud computing software developers will be in high demand as Amazon Web Services, Azure, Google Cloud, as well as others will continue to ramp up and expand their cloud computing services to even more industries.

The broad adoption of cutting edge technologies and mass data collection is already being seen in the AI space, which is impacting even informal jobs like babysitting. AI designers are in short supply, with even non-profits paying extremely lucrative salaries for talented AI software engineers. Demand for those engineers, along with their pay, will likely see significant increases in 2019.

Both cloud computing and AI require collecting vast amounts of data to be successful, which is good news for data scientists. They will likely see increased demand and wages as organizations continue to emphasize collecting and utilizing big data.

Cybersecurity analysts are also in luck. The collection of vast quantities of data increases the risk and cost of cybersecurity threats. The ongoing stream of massive data breaches have shaken consumer confidence and increases the threat of government regulation in the tech space. Many companies are trying to shore up their cybersecurity teams to protect their customer data. As a result, we expect that the ranks of cyber security professionals will grow significantly in 2019.

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Social media make an impact

The ever-increasing influence of tech is spilling over into other industries. Widespread use of social media has facilitated cultural and political change across America. Social media specifically is credited by some as a driving force for changing attitudes towards marriage equality for same sex couples in America. The victory for marriage equality led to more work for wedding planners, florists, bakers, and family lawyers, among others.

Similar societal forces have led to the normalization and decriminalization of marijuana. Recreational marijuana is now legal in 10 American states, as well as Canada. An additional 23 American states have legalized marijuana on a limited basis. It’s very likely that more states will pass recreational marijuana laws in the near future. All this points to job growth in the cannabis industry, so don’t be surprised to see an uptick in budtenders in 2019!

Finally, pervasive tech has also given rise to the gig economy. Platforms like TaskRabbit and UpWork allow people to make money on the side by doing anything from assembling Ikea furniture to editing blog posts. They rely on 24-hour online talent marketplaces, but schedules are unpredictable, pay is inconsistent and there are no additional benefits. Companies feeling reluctant to increase payroll and workers feeling the pinch of underemployment mean the gig economy will continue to expand next year.

Increased worries about a slowdown

Common recession indicators such as the inversion of the yield curve suggest a recession is likely within the next twelve months. This is coupled with corporate bond debt reaching unsustainable levels, with $3 trillion in bonds just above junk-bond status. Industries especially at risk include natural resource companies, especially oil and gas exploration, which account for a significant amount of outstanding corporate debt. That debt is unlikely to be serviced in the near term due to a prolonged fall in oil prices.

There are also structural issues in the housing market. Single family housing starts fell 1.8% from September through October 2018. Year over year total housing starts have fallen 2.9%. A lack of new home starts is likely to drive up real estate prices, which is concerning given the intense demand for affordable housing across the country. However, in the last few months the Case-Shiller index, which measures the appreciation of single-family home values, suggests there’s a cooling of the housing market. These divergent trends are coupled with a quiet revolution in American home financing: nearly half of mortgages now do not originate from traditional banks. Given the lack of a traditional financing structure for many homes in the US, it’s unclear whether the market is sufficiently robust to weather a future downturn.

Student debt

Lastly, there is concern that the student debt bubble is about to burst. As tuition for colleges continues to rise, much of the financial burden is now falling on students and their families. Student loan debt has doubled since the Great Recession in 2007, representing $1.5 trillion in outstanding debt across 44 million Americans. Only one in four of those 44 million are actively paying down both principal and interest on their loans. According to the U.S. Department of Education, some 43% of all student loans are in an economically distressed state, with 10% of those loans seriously delinquent. As such, the burden of student loans is likely to be a continued drag on consumer spending for the foreseeable future.

All of this means that the storm clouds on the horizon are unlikely to peacefully blow over. We expect to see at least the beginnings of a recession in the next twelve months. That being said, a recession won’t stop the rapidly escalating pace of technology adoption throughout the economy. We can safely say that job titles directly associated with that progress will continue to do well in 2019 and beyond.

Sudarshan is an economist and the Director of Research at PayScale. He spends his time at PayScale crunching compensation data and identifying current trends to help businesses make better decisions around pay

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