Corporate America may be overstuffed with workers

The U.S. job market is still hot, and that could be a weakness. The unemployment rate in September was a healthy 3.5%, according to the Labor Department on Friday, a decline from the 3.7% jobless rate in August. Wages ticked up as well, rising 0.3%. This shows some strength in the economy, just as Federal Reserve Chairman Jay Powell furiously hikes interest rates to fight inflation. A workforce reckoning is in making.

Retailer trends offer a window into what could happen. As interest rates have risen rapidly, making people feel less wealthy, consumers have pulled back on their buying. Corporate America was caught off guard by a sudden change in demand. That left the likes of Walmart (WMT.N), Target (TGT.N) and Nike (NKE.N) stuck with a glut of merchandise.

After staffing up to meet the challenges of the pandemic, businesses may find that their payroll is similarly overstocked. Unlike flogging inventory though, companies might find it easier to chop an excess workforce. (By Jennifer Saba)

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