WASHINGTON -- The US job market defied blistering inflation, rising interest rates and growing recession fears. Every month, U.S. employers continue to add hundreds of thousands of workers, at a pace regularly exceeding most economists' expectations.
But one of the pillars of the country's economic power is beginning to crack. Job openings are down and more Americans are signing up for unemployment benefits.
Wells Fargo senior economist Sarah House said, "Looking across the labor market, there are broad indications that cracks are beginning to emerge. It's not as strong as it was seen six months ago.''
The Labor Department said Friday that how many jobs were created in July, the very low U.S. unemployment rate has pushed rates up. started.
Forecasters expect the economy to add an additional 250,000 jobs last month, according to a survey by data firm FactSet. While this would normally be a solid number, we expect a significant slowdown in 2022. Employers have hired an average of 457,000 workers per month so far this year.
The unemployment rate is expected to remain at 3.6% for the fifth straight month.
The numbers released on Friday, of course, have political implications. Rising prices and the risk of a recession are likely to weigh on voters in November's midterm elections, which could make it harder for President Joe Biden's Democrats to hold on. parliamentary control.
The economic background is troubling. Gross domestic product (the broadest measure of economic output) fell in both the first and second quarters. A consecutive GDP decline is one definition of a recession. And inflation is raging at her highest in 40 years.
The current resilience of the labor market, especially the low unemployment rate, is the main reason most economists don't think the recession has started yet. In December 1969, when the 11-month long recession began, the unemployment rate was even lower, at 3.5%.
The recession is not just an American problem.
In the UK, the Bank of England forecast on Thursday that the world's fifth-largest economy will slip into recession by the end of the year.
Russia's war in Ukraine darkens the outlook for Europe as a whole. Conflict has led to shortages of energy supplies and rising prices. European nations are bracing for the possibility that Moscow will reduce, and possibly completely cut off, the flow of natural gas, which is used to power factories, generate electricity and heat homes in the winter.
Ration may be required by industry if Europeans cannot store enough gas for cold weather.
Since her COVID-19 hit in early 2020, the economy has been out of control.
The pandemic has closed businesses, kept consumers at home, and brought economic life to a near halt. In March 2020 and her April, American employers cut her 22 million jobs and the economy plunged into her two months of deep recession.
However, huge amounts of government aid and the Federal Reserve's decision to cut interest rates and pump money into the financial markets facilitated a remarkably quick recovery. Caught off guard by the strength of the rebound, factories, shops, ports and freight yards were overwhelmed with orders, rushing to reinstate workers furloughed when COVID struck.
The result is labor and material shortages, delays in shipments, and rising prices. In the United States, inflation has risen steadily for over a year. Consumer prices rose 9.1% year-on-year in June, the biggest increase since 1981.
The Fed underestimated the recovery in inflation and attributed the rise in prices to a temporary bottleneck in his supply chain. Since then, we have acknowledged that the current rate of inflation is not "temporary" as it was once referred to.
Currently, central banks are responding aggressively. He has raised the benchmark short-term rate four times this year, with more hikes on the horizon.
Rising borrowing costs are hurting. Rising mortgage rates, for example, have cooled a red-hot housing market. Sales of previously occupied homes fell in June for the fifth straight month.
Real estate firms, including lender loanDepot and online housing broker Redfin, have begun laying off workers.
The labor market shows signs of instability.
The Labor Department reported Tuesday that the employer posted his 10. In June, he had 7 million job openings, a healthy number, but the lowest since September.
Also, her four-week average number of Americans applying for unemployment benefits—a proxy for layoffs that smoothes out week-to-week fluctuations—has risen to its highest level since November last week, but that The numbers are exaggerated by seasonal factors.
Friday's jobs report comes at a crucial time for President Biden, who has argued that the economy is simply slowing, not headed for recession. Inflation is boosting public support for Biden, but the administration has stressed that the 3.6% unemployment rate and strong job growth are signs of a healthy economy. Spokesperson Carine Jean-Pierre said the administration expects the pace of hiring to slow further in the coming months as unemployment is already near historic lows and potential workers are scarce.
The slowing pace of hiring and declining wage growth may suggest that inflationary pressures are easing, but the White House has warned that Republicans will Now that he is in the war, he is trying to convince the American public that slowing growth is positive. They say the recession has already started. They cite a drop in GDP in the first half of this year.
"We expect close to 150,000 jobs per month," Jean-Pierre said at a briefing on Thursday. "This kind of job growth is consistent with the low levels of unemployment we've seen." Hope to continue. However, rising interest rates will gradually hurt economic growth, she said.
"Actually, we expect hiring to drop completely in the first quarter, probably in the second quarter of next year," she said. “If monetary policy continues to tighten, it will affect overall business conditions and thus the demand for workers.
“Our forecast is that the US economy will probably
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Josh Bork of Washington and Courtney Bonnell of London contributed to this story.
