Monthly employment reports were in question as inflation rose for months and the Federal Reserve acted aggressively to keep it in check. Has the labor market yielded to gravity yet?
So far the answer has been “no, most likely not”. But in her July report, which arrived on Friday, the answer is likely “yes, but it hasn’t hit the ground.”
Since supply chain problems and the war in Ukraine sent prices skyrocketing, the brightest feature of the economy has been strong job growth, adding 6.3 million jobs in the past 12 months. As of June, the US remained within 520,000 of its pre-pandemic peak, held back by falling government jobs.
But that recovery is becoming increasingly difficult as inflation eats into consumers’ purchasing power and dampens their moods, and rising interest rates begin to weigh on demand for bulk purchases such as homes and cars. Gross Domestic Product fell for the second consecutive quarter due to slowing inventory growth and lower housing investment.
And there are recent signs that economic headwinds are also impacting the labor market. Job vacancies have fallen from their record highs in the spring due to lower demand for retail, leisure and hospitality workers. Initial billing Unemployment insurance surged to 260,000 a week last month from a low of 166,000 a week in March. Hiring on LinkedIn Deceleration from Aprilespecially in construction and hotel accommodation.
On average, forecasters expect Friday’s report to show the country added 250,000 jobs in July. Last month’s report showed an increase of 372,000 in June, similar to the previous three months.
Morning Consult, which conducts polls and analysis, Investigation About 20,000 a week have noticed an increase in the number of US adults reporting loss of income due to layoffs or reduced work hours. These increases were steepest among black and Hispanic workers, consistent with research showing that when employment slows, people of color are the first to be affected.
However, as has been the pattern since 2020, the increase in income losses has not been concentrated in sectors sensitive to the surge in coronavirus infections.
“I think it’s not about the coronavirus, it’s about the broader macroeconomic slowdown,” said John Lear, chief economist at Morning Consult. “People were hoarding workers, and now we are at a point where it makes sense to let them go because of economic cycle uncertainty.”
