What Happens to Real Effective Exchange Rate When the Quits Rate Collapses?
What happens when the JOLTS quits rate collapses below 2.0%? Loss of worker confidence, wage growth deceleration, and recession risk implications.
How Real Effective Exchange Rate Responds
Scenario Background
The quits rate measures the percentage of the workforce voluntarily leaving jobs each month. It reflects worker confidence: people quit when they believe they can find better positions elsewhere. A quits rate above 2.5% historically signals a tight labor market with strong wage pressure, while a reading below 2.0% indicates workers are staying put, often out of caution about finding new employment.
Read full scenario analysis →Historical Context
The quits rate peaked near 3.0% in late 2021 during the "Great Resignation" and normalized to roughly 2.1% by 2024. Pre-pandemic peaks were 2.4% in 2018-2019. Historical collapses include 2001 (2.4% to 1.7%), 2008-2009 (2.1% to 1.2%), and March 2020 (2.3% to 1.5%). In each case, wage growth decelerated within 2 to 4 quarters and unemployment rose.
What to Watch For
- •Quits rate falling below 1.9%
- •Layoffs rate rising above 1.2% simultaneously
- •Atlanta Fed Wage Tracker declining below 4%
- •Unemployment rate rising 0.3% over three months
- •Job-switcher wage premium narrowing below 2%
Other Assets When the Quits Rate Collapses
Other Scenarios Affecting Real Effective Exchange Rate
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