ICYMI: The @BLS_gov #JobsReport for July showed continued low unemployment and job gains across a variety of industries. 📈 Here are some highlights. pic.twitter.com/ashyDchsnI
— U.S. Department of Labor (@USDOL) August 3, 2024
According to the Bureau of Labor Statistics, the U.S. unemployment rate rose to 4.3% in July, a 0.2% increase from June. This has concerned economists who think the Federal Reserve has waited too long to lower interest rates. In July, 114,000 jobs were added, but temporary layoffs increased by 249,000.
Job growth continued in health care, social assistance, and construction. However, government job growth slowed, adding only 17,000 jobs. Elise Gould, an economist at the Economic Policy Institute, said the labor market remains strong historically but has softened.
Good news is good news again…bad news is bad news…https://t.co/CHFFsX4R1i
(via @JeffCoxCNBCcom @cnbc)#jobs #economy
— Dominic Chu (@TheDomino) August 2, 2024
“There’s been no inflationary pressures coming from the labor market as wage growth decelerates,” Gould said. She worries that the Fed has delayed rate cuts too long, risking an unnecessary cooling of labor market. The Fed didn’t cut rates at its recent meeting, saying it needs more data showing decreasing inflation.
The big news in this morning's job release is the unemployment rate up to 4.3% while job growth slows to 114K, wage growth slows and average weekly hours fall. The only contra-indicator was labor force participation up 0.1pp. pic.twitter.com/khFipKBWQ5
— Jason Furman (@jasonfurman) August 2, 2024
Fed Chair Jerome Powell said the labor market is normalizing from a hotter state. He indicated a rate cut could happen in September if data supports it. We’ve seen one quarter of good inflation data and significant changes in the labor market.
Our economy is crumbling under the Biden-Harris administration.
Unemployment and inflation are going UP while job growth is going DOWN.
We are knocking on the door of a recession, and it is @JoeBiden and @KamalaHarris’ fault.https://t.co/GM5Rrvq2hm
— Coach Tommy Tuberville (@SenTuberville) August 2, 2024
U.S. labor market trends and concerns
That time [to cut rates] could be in September if the data supports it,” Powell said. The Fed started raising rates in March 2022 to fight inflation but stopped increases last fall.
It wants to reduce inflation to 2% while maintaining maximum employment. High interest rates frustrate families, impacting borrowing costs and making homeownership less attainable due to higher mortgage rates and rents. Economists like Dr.
Rakeen Mabud of the Groundwork Collaborative say prolonged high rates can hurt the labor market and lead to economic challenges if not adjusted properly. The unemployment rate increase triggers the Sahm Rule, a recession indicator. However, Gould says the increase might not be immediate cause for concern since it can also result from more people entering the labor force.
“There’s a sense of optimism among workers,” Gould said. “Many are re-entering the job market and actively seeking employment, even if they haven’t found jobs yet.”
UC Berkeley professor Jesse Rothstein suggested the Fed’s “soft landing” approach—gradually slowing the economy without a severe downturn—might still need frequent, nuanced adjustments. Wage growth has slowed to a 3.6% increase from a year ago, the lowest in two years, indicating minimal wage-driven inflation.
Gould noted that as inflation decreased, nominal wage growth slowed, improving workers’ living standards over the past year. The Fed’s upcoming decisions navigating inflation control and employment will be crucial in determining the economic landscape ahead.
