President Joe Biden celebrated a better-than-expected July jobs August 5 report, calling it “the result of my economic plan to build the economy from the bottom up and in the middle.”
Although the White House had initially anticipated a lower figure, the Biden administration and other Democrats in Washington celebrated the numbers.
The headline figure of 528,000 new jobs last month allowed the United States to close in on the 22 million jobs that were lost during the COVID-19 pandemic. But market analysts are digging into the data and finding new trends and new hurdles the economy has yet to overcome.
Are workers worried about a recession?
A July survey from Insight Global found that nearly 80 percent of American workers fear losing their job in a recessionwith 54 percent of those surveyed saying they would be willing to take a pay cut if it meant continuing to work.
the June CNBC All-America Workforce Survey found that 83 percent of workers identified a recession as their top short-term concern. That was followed by wages that didn’t keep up with inflation.
Recession fears have been paramount in recent months. However, now that the United States has entered a technical recession, with consecutive negative gross domestic product (GDP) readings, workers may be trying to secure a job before the economic downturn amplifies, according to Bryce Doty, senior manager. portfolio of Siéntese Investment Associates.
Although wages rose 5.2 percent year over year in July to more than $32 an hour, the rate still trails the 9.1 percent growth in the consumer price index (CPI). With widespread inflation entrenched in the post-pandemic economy and recession fears seeping into the market, workers could be looking to millions of job opportunities to ensure they can survive a downturn.
“And these job offers have been there for a long time. It’s not like the economy suddenly expanded and businesses created new jobs,” Doty said in an Aug. 5 note. “It feels more like people are burning through their accumulated savings and saying, ‘Oh shit! I have to get a job!’”
The personal savings rate has been on a downward trend this year, falling to 5.1 percent in June from 5.8 percent, data of the program of the Bureau of Economic Analysis. In addition, consumer credit arose at $40.15 billion in June, up from an upwardly revised $23.79 billion in May. Credit growth has also soared 10.5 percent year over year.
According to the Bureau of Labor Statistics (BLS), Work offers it fell by 605,000 in June to 10.7 million, the lowest level since September 2021.
Cody Harker, head of data and insights at recruitment marketplace agency Bayard Advertising, told The Epoch Times that the data shows a notable increase in traffic from job seekers.
“Job seekers, including those on the fringes, may be looking for secure employment ahead of an economic downturn; we’ve seen conversion rates from completed applications to hires increase by a staggering 24 percent during the first half of this year,” he said. “This could also be influenced by rising employment among older workers, who are re-entering the workforce out of necessity or postponing retirement to stay afloat during a potential recession.”
Recent BLS Data to show that about 1.5 million potential retirees have returned to the office. The labor participation rate of people aged 55 to 64 has returned to its pre-pandemic level.
Inflation and Productivity
Another notable development in the job market has been the immense increase in people who have taken on multiple jobs. Total number of multiple workers exceeded 7.5 million in July, up from about 7 million in the same period a year ago.
With the labor market unable to generate the wage gains needed to withstand the current inflationary environment, employees are being forced to accept lower wages, Peter Schiff, president and CEO of Euro Pacific Capital, told The Epoch Times.
“How is that a strong market?” Schiff asked. “Many people are forced to take second and third jobs because the job they have is not enough.”
Doty echoed this sentiment in his comment, noting that “for workers, this is a recession.”
Labor productivity has also become a growing concern in this economy.
Peter Boockvar, Chief Investment Officer of Bleakley Advisory Group, indicated on August 5 that when hiring is as strong as it is in the midst of a GDP contraction, it must mean that productivity is being decimated.
When output is slow and inputs are huge (unit labor costs rose nearly 13 percent in the January-March period), it suggests trade costs are rising and bottom lines could be hurt. When this occurs, it can lead to layoffs, experts say. But if companies are desperate to find talent, last year’s profit margins may help cushion the blow.
Preliminary labor productivity figures for the nonfarm business sector were released last week, with experts projecting a 4.6 percent decline in the second quarter. In the first quarter, productivity fell 7.3 percent, the biggest drop in quarterly output since the third quarter of 1947. Hours worked rose 5.4 percent, but output fell 2.3 percent. .
As GDP becomes more dependent on productivity growth, this could be a major challenge for the nation, according to Edward Chancellor, an investment strategist and author.
“By aggressively pursuing a 2 percent inflation target and constantly living in horror of even the mildest form of deflation, we were not only given ultra-low interest rates with their unintended consequences in terms of the ‘everything bubble,’ but which also facilitated capital misallocation of epic proportions. They created an overfinancialization of the economy and an increase in indebtedness. Putting all this together, they created and instigated an environment of low productivity growth,” he said recently. saying Mauldin economics.
Layoffs across the United States
The other aspect of today’s job market that has economists stumped is the growing number of layoffs and Americans filing for unemployment benefits.
In the week ending July 30, initial jobless claims rose by 6,000 to 260,000, weekly figures from the Labor Department show (pdf). Since April, the four-week average, which strips out week-to-week volatility, has been rising steadily.
US-based companies announced plans to cut nearly 26,000 jobs from their payrolls in July, up 36.3 percent from a year earlier. This was the second-highest number of job cuts this year, according to Challenger, Gray and Christmas.
Data of Layoffs.for your information, which tracks companies that lay off their employees, shows that 16,104 employees were laid off last month. In recent months, many of America’s largest companies have cut their payrolls, including Netflix, Amazon, Walmart, Ford and Peloton.
The Fed is watching
While reading the headline might dismiss the plethora of labor market concerns, economists and market analysts are digesting the ample information.
Whether that will eventually lead to a slowdown in jobs remains to be seen, but the Federal Reserve will be paying close attention.
If current labor conditions withstand the central bank’s tightening cycle, financial markets are signaling that they believe they can provide the institution with an opportunity to pull the trigger with a 100 basis point rate hike at the Committee’s policy meeting. Federal Open Market for September.