Economists had predicted that job growth would slow due to the Fed raising interest rates sharply once again in July, but the Labor Department’s report, released Friday morning, showed that job growth surpassed expectations.
The Labor Department released its monthly payroll report, showing that the economy added 528,000 jobs during the month of July, despite searing inflation and interest rate hikes. Refinitiv economists had predicted that there would only be 250,000 jobs added for the seventh month of the year.
The unemployment rate hovers around last month’s numbers at 3.5 percent. This is the lowest unemployment rate to date since the pandemic began in 2020.
Economists have held that the strong jobs market is the only thing holding the economy from rolling downhill quickly. They point to the Federal Reserve raising interest rates by 3/4 of a point the last two months and two consecutive quarters of negative economic growth, particularly GDP (gross domestic product). GDP is considered one of the “broadest measure of goods and services produced in the nation,” and although slightly, it has constricted in the last two quarterly reports. By definition, the country should be in a recession, but Biden Administration officials argue that the strong jobs report shows that America hasn’t quite hit the recession just yet.
Daniel Zhao, senior economist at Glassdoor, says “The job market shows no signs of slowing down, even in the face of the unexpected challenges being thrown at it.” Zhao acknowledged that the jobs market alone is “holding back a rising tide of recession fears.”
CNN claims that the United States’ economy has now “regained all jobs lost during the pandemic.” The media outlet described the addition of 528,000 jobs a “blowout.”
This is the largest growth in the jobs market since February 2022, when the Labor Department held that 714,000 jobs were added. The average monthly gain since then has held steady at about 388,000 jobs, according to the Bureau of Labor and Statistics.
The growth in job offerings is widespread across a number of sectors of the economy. The leisure and hospitality sector, however, saw the greatest gains in July. Even so, jobs in this area of the service sector is still about one million less than it was before the pandemic strangled the American economy.
Labor participation is slightly down. In June, there was a 62.2 percent participation rate; in July, this number slipped slightly to 62.1 percent. Earnings were also slightly up; for the year, wages are up by 5.2 percent. Over the last month, wages rose by 0.5 percent from June’s statistics.
Twenty million jobs were lost during the pandemic, and economists expected to see signs of a cool down this month rather than any uptick, especially with the Fed raising interest rates by 75 points. Before the report released on Friday, the American economy was approximately 524,000 jobs below February 2020 employment levels.
Mark Hamrick, senior economic analyst at Bankrate, says that “these robust job market numbers strongly argue against recession talk.” Hamrick added that the data of Friday’s report coupled with information about job openings surpassing people looking to be employed could actually inspire the Fed to hike the interest rates by another sharp increase.
President Joe Biden has not released a statement on the Labor Department’s latest jobs report. The president has continued to test positive for COVID since earlier this week, and he has worked in isolation for the duration.
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