Riverside, California 2022-08-05 06:45:26 –
Economists are concerned about a widening crack in the economy, swallowing up new jobs as fears of a recession grow.
WASHINGTON — The U.S. job market defied blistering inflation, rising interest rates and growing recession fears. Each month, U.S. employers continued to add hundreds of thousands of workers, often exceeding forecasters’ expectations.
But now, economists fear signs of weakness in jobs are beginning to appear, threatening one of the last bastions of U.S. economic strength. The number is increasing.
“Looking across the labor market, there are widespread signs that cracks are beginning to emerge,” said Sarah House, senior economist at Wells Fargo. Not as strong.”
The Labor Department reported on Friday how many jobs were created in July and whether the ultra-low U.S. unemployment rate is starting to rise.
A survey by data firm FactSet predicts the economy added an average of 250,000 jobs last month. 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 consecutive month.
Job listings also have political implications. Concerns about rising prices and the risk of a recession could weigh on voters in November’s midterm elections, making it harder for President Joe Biden’s Democrats to maintain control of Congress.
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 his 40-year high.
Continued strength in the job market, especially the low unemployment rate, is the main reason most economists don’t think the recession has started yet, but it has stoked fears that a recession is approaching. I am strengthening. In December 1969, when the 11-month-long recession began, the unemployment rate was even lower, at 3.5%.
Americans aren’t the only ones facing difficult economic times.
Concerns about a recession are also growing in Europe. In the UK, the Bank of England forecast 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 the colder months.
Since the outbreak of COVID in early 2020, the economy has been out of control.
The pandemic has nearly brought economic life to a halt as businesses close and consumers stay home as health precautions. In March 2020 and his April, U.S. employers cut his staggering 22 million jobs and the economy plunged into his two months of deep recession.
But massive government aid and the Federal Reserve’s decision to cut interest rates and pump money into the financial markets has facilitated a surprisingly 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 shortages of workers and supplies, 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 initially underestimated the recovery in inflation, believing prices were rising due to temporary supply chain bottlenecks. However, inflation did not subside.
Central banks are now 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 Loan Depot and online home broker Redfin, have begun furloughing workers.
The labor market shows other signs of volatility.
The Labor Department reported Tuesday that employers posted 10.7 million job openings in June. That’s a healthy number, but it’s the lowest since September.
And while the four-week average number of Americans signing up for unemployment benefits (a layoff proxy that smoothes out weekly fluctuations) rose to its highest level since November last week, that number is seasonal. may have been exaggerated by
Friday’s jobs report came at a crucial time for President Biden, who claims the economy is simply slowing rather than headed for recession. However, the administration has stressed that the 3.6% unemployment rate and strong job growth are signs of a healthy economy.
White House spokeswoman 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. said that he is
The slowing pace of hiring and lower wage growth may also suggest that inflationary pressures are easing, but with Republican lawmakers saying the recession has already begun, growth is slowing. The White House is trying to convince the American public that declines are positive. started; they cite a drop in GDP in the first half of this year.
“We expect to employ close to 150,000 people 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.”
The Economist House of Wells Fargo expects employers to continue hiring for several months. However, rising interest rates will gradually hurt economic growth, she said.
“Actually, we expect hiring to drop completely in the first quarter, maybe the second quarter of next year,” she said. “If monetary policy continues to tighten, it will affect overall business conditions and thus worker demand.
“Our forecast is that the U.S. economy will likely enter a recession early in the year.”
Josh Boak from Washington and Courtney Bonnell from London contributed to this article.
Recession fears grow ahead of US jobs report Source link Recession fears grow ahead of US jobs report