6 Questions about Economy, Workers’ Compensation for NCCI’s Stephen Cooper

The dynamically changing workforce and evolving economy are top of mind for workers compensation executives. NCCI’s latest Quarterly Economics Briefing (QEB) provides an in-depth perspective on recent economic developments and their impact on workers compensation. QEB’s author, NCCI Executive Director & Senior Economist Stephen Cooper, shared more about it: 

Q. What’s going on in the economy right now? 

Stephen Cooper: You know it’s an interesting time to be an economist right now, and here’s what we know. Early in 2025, the narrative surrounding the US economy was that of exceptionalism. The US economy had continued to grow strongly in the face of headwinds, vastly outperforming developed market peers since 2019. That narrative, however, has been replaced with one of economic uncertainty and caution as fiscal policy changes were announced and put into effect.  

Since the beginning of the year, economists have sharply lowered their forecasts for Gross Domestic Product (GDP) growth in 2025 and sharply raised their probabilities of a recession. Uncertainty reigns supreme; however, the data has yet to show material evidence of any impacts from these policy changes. 

Q. The QEB that your team just put out said that the US economy shrank in the first quarter. Is that not a sign of trouble in the data? 

SC: In the first quarter, the economy shrank for the first time since early 2022. GDP growth from Q4 2024 to Q1 2025 was –0.2% at an annualized rate. This may have been interpreted by some as confirmation of the lowered GDP forecasts for 2025, but we would urge caution in this interpretation. While the economy was certainly influenced by the aforementioned fiscal policy changes, the impacts seen in Q1 GDP are a little more complex. 

As companies and individuals pre-bought goods in order to get ahead of tariffs, net exports subtracted nearly 5% from the economy in the first quarter. But a more focused measure of the economy, real final sales to private domestic purchasers (the sum of consumer spending and business investment), grew a solid 2.5% in the first quarter. The large distortion from trade activity in the first quarter will likely wash out later in the year.  

Q. You also author NCCI’s Labor Market Insights report, which provides a monthly overview of key labor market statistics. The labor market is the most important sector of the economy for workers compensation. What are we seeing there? 

SC: So far in 2025, the labor market has yet to show any material signs of weakness, with job growth averaging around 125K per month and the unemployment rate stable near 4%. This resilient performance has kept payroll growth elevated near 5.5% for workers compensation, thanks to strong wage growth offsetting moderating employment growth.  

These may be comforting data points; however, the labor market is typically a lagging indicator for the economy, and so we will have to continue to watch the data to see if this labor market performance continues amongst the uncertain economic backdrop. 

Q. We’ve mentioned economic uncertainty quite a bit so far in this conversation. Can you tell us a bit more about what might be contributing to this uncertain environment? 

SC: The largest contributors to uncertainty around the economic outlook in 2025 have been tariffs and trade policy. Keeping track of the current state of trade policy has been challenging, not just for economists trying to assess the impact, but also for business leaders attempting to plan for the future. 

Q. As a follow-up, do we expect tariffs and trade policy to impact workers compensation? 

SC: For workers' compensation, tariffs will have both direct and indirect impacts. Directly, imported durable medical equipment, supplies, and pharmaceuticals will face higher prices from the increased tax paid by importers. These categories make up roughly 15% of workers compensation medical costs.  

Indirectly, higher prices for medical equipment and supplies may increase prices for physician, hospital, and long-term care services over time as higher input costs are passed through to the end consumers.  

Keep an eye out for the next Medical Inflation Insights report in mid-July for the latest insights on workers compensation medical prices. 

Q. If readers are interested in learning more, where should they go? 

SC: All of the resources I mentioned, plus the complete QEB, are on ncci.com right now.  

Stephen Cooper joined NCCI in August 2023 as Executive Director & Senior Economist, leading the Economic Research and Communications Team. The team’s research focuses on economic developments impactful to the workers compensation system, including labor market dynamics, demographics, inflation, interest rates, and state level insights to aid in ratemaking decisions.

Prior to joining NCCI, Cooper was vice president, senior economist for Hartford Investment Management Company, a subsidiary of The Hartford. In this role, he oversaw economic research developing insights to drive alpha generation for portfolio management. He was also a key consultant with external clients on key economic developments, frequently speaking at industry events.

Cooper has MA and BA degrees in economics both from Bowling Green State University.

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