A SURPRISINGLY POSITIVE SIGN FOR THE ECONOMY, THE JOB MARKET GOT BETTER ANDlt; iframe src= “https://www.npr.org/player/embed/1115690578/1115906761
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Expand this picture Getty Images/Mario Tama
switch to caption Getty Images/Mario Tama
Getty Images/Mario Tama Last month saw an unexpected increase in hiring as the U.S. employment market surprised observers with its resilience in the face of high inflation and weakening economic activity.
The Labor Department reports that employers created 528,000 new jobs in July, a considerable increase over June.
Additionally, the number of jobs added in May and June was revised up by a combined 28,000 jobs, and the unemployment rate decreased to 3.5%, marking its lowest point in decades.
ECONOMY Analysts who had predicted a decline were shocked by the acceleration in job growth. All of the jobs lost during the first few months of the pandemic have now been replaced by the American economy.
Gains in July were widespread, with factories gaining 30,000 jobs, shops adding 22,000 jobs, and bars and restaurants adding 74,000 jobs.
Despite a decline in home construction due to rising loan rates, construction companies nonetheless increased their workforce.
NO SIGN OF RAPID JOB CUTBACKS Separate data released this week by the Labor Department indicated a little decrease in the number of vacant positions while a slight increase in the number of persons submitting new claims for unemployment benefits.
Even if certain businesses, like trading app Robinhood, have lately announced job cuts, there are still no signs of widespread layoffs or a sharp increase in unemployment.
According to Dave Gilbertson, vice president at UKG, which keeps track of the working hours of about four million hourly employees, “I think what we’re seeing is the gentle landing that a lot of folks are looking for.” “I firmly believe that the labor market will remain tight for a considerable amount of time.”
The U.S. economy shrank during the first half of the year, according to other economic statistics, which contrasts with the labor market’s resilience.
That is frequently a symptom of a recession, but many experts find it difficult to explain in light of the fact that the economy has created more than 3 million new jobs this year.
Federal Reserve Chairman Jerome Powell stated last week that “if you think about what a recession truly is, it’s a broad-based drop across many industries that’s sustained for more than a couple of months.” It doesn’t seem like that, at all.
Expand this picture Image by Michael M. Santiago via Getty
switch to caption Image by Michael M. Santiago via Getty
Image by Michael M. Santiago via Getty THE FED HAS A DIFFICULT JOB. In an effort to reduce inflation, Powell and his central bank colleagues are purposefully slowing the economy by hiking interest rates. But they want to avoid doing so in order to avoid a recession or a large-scale loss of jobs.
According to Powell, “We believe there is a way for us to be able to bring inflation down while maintaining a healthy labor market.” “We are aware of the obvious narrowing of the way.”
ECONOMY Since soaring wage growth has the potential to fuel inflation, the central bank would actually welcome some cooling in the labor market. For the twelve months ended in June, Private sector wages jumped increased by a staggering 5.7%, while employers’ benefit costs increased by 5.3%.
House declared that wage and benefit growth was excellent for households. However, it is still below inflation, which makes the Fed’s inflation problem very challenging to control and lower.
NOT EVERY RECESION IS CREATED EQUAL According to House, this year’s job growth will remain subdued due to rising interest rates and declining consumer spending. Even if the Fed’s efforts to control inflation do result in a recession, as many forecasts anticipate, it will probably be far milder than the previous two recessions in 2007–9 and 2020.
Not every recession is as painful as a financial catastrophe or a worldwide pandemic, according to House.
According to the statistics released on Friday, there were fewer persons working or seeking for job in July than in June as a whole. The fall last month was primarily among teens. The percentage of workers ages 25 to 54 who participated increased slightly.
Given the inflation that households are experiencing at the moment, House suggested that some workers might decide to re-enter the labor force to support their financial situation.