“Both total nonfarm employment and the unemployment rate have returned to their February pre-pandemic levels,” says the U.S. Bureau of Labor.
“Economy adds 528,000 jobs in July as hiring surges despite high inflation,” reported USA Today triumphantly this morning. “US recovers all jobs lost in COVID.”
“Total nonfarm payroll employment rose by 528,000 in July, and the unemployment rate edged down to 3.5 percent,” the U.S. Bureau of Labor Statistics announced to great fanfare in the press. “Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care.”
“Both total nonfarm employment and the unemployment rate have returned to their February pre-pandemic levels,” is the bottom line, accord to the Bureau of Labor and Statistics.
The news is welcome in every corner of the U.S. economy, which is still being inundated by the twin terrors of rising inflation and skyrocketing fuel prices.
The July Jobs report, surpassing as it does most predictions for the month, has breathed new life into arguments as to whether or not the economy has already entered a period of recession.
Two consecutive quarters of negative GDP growth, which the U.S. has just experienced, typically meets the standard definition of a recession. But it’s hard to judge the post-COVID economy, if indeed we have even yet entered that vaunted space, by any standard metric.
Stubbornly low unemployment, trending down, gives the “Hey, Folks: We’ve Not in a Recession” crowd renewed hope the U.S. might pull out of a temporary slump faster than anyone dared dream.
“Inflation hit a 40-year high of 9.1% in June,” admitted USA Today. “The higher prices and borrowing costs have led consumers and businesses to slow spending and have stoked recession fears.”
Economists, and reporters on the economics beat, tend to be a gloomy and analytical bunch. Even in the rosy glow of a better-than-expected jobs report, a note of alarm is still creeping in around the edges.
“There are signs the job market could soon soften,” warns Paul Davidson for USA Today. “Last week, initial jobless claims, a gauge of layoffs, rose to the highest level since November based on a four-week moving average.”
High profile companies, from Amazon to Walmart, have been announcing major job cuts in recent weeks. It might be a few months until the impact of those cuts, and others sure to follow if consumer spending continues to slow, show up in the labor market.
Unemployment is a lagging indicator. First, consumers spend less. Fewer customers, spending less, means companies make less money. Companies take steps to remain profitable and competitive; downsizing, layoffs, store closures, cutbacks.
Nor is the good news about low unemployment and jobs gains likely to soften American consumers confronted with sticker-shock on a daily basis.
“Inflation’s wrath, recession fears are (quickly) creeping into middle-class America,” wrote Medora Lee for USA Today yesterday. Sharing an anecdote about a middle-class family in, “full recession mode,” Lee explored the impact of the current economic situation on Americans.
There is even worse news for lower-income American consumers and families living paycheck-to-paycheck.
“Apartment rents are shooting up in hundreds of cities across the U.S.,” CBS told readers of “Moneywatch” yesterday.
“The housing markets around the country that have seen the sharpest rent increases: the New York City metro area; Boston, Massachusetts; Miami, Florida; San Francisco, California; Seattle, Washington; and Austin, Texas,” reported CBS News. “In Austin, for example, rent prices are up more than 100% compared to 2021.”
“The consumers who fueled the U.S. economy through the pandemic are starting to crack,” warned the Wall Street Journal on July 31, 2022, echoing a sentiment coming from plenty of other quarters. “Many consumers who weathered the pandemic, with the help of government stimulus and fewer expenses of their own, are running out of steam. Some of them now face the return of commuting costs, a need for new work clothes and steeper child-care expenses.”
One of the those steeper child-care expenses is sure to be the usual back-to-school costs of September. Public education, while a tremendous value and the cornerstone of any peaceful and prosperous nation, isn’t free. Kids need school supplies, clothes and shoes to replace those they’ve outgrown, school supplies, books, and school supplies.
There are fees, clubs, dues, activities, field trips, sports equipment, musical instruments, ballet slippers and a near infinite number of other things kids need when school starts up again in fall.
But while inflation bites, and prices continue to climb, not yet reflecting the lower gas prices we are seeing at the pump, good news is good news about the U.S. economy.
The strong employment marketplace presents an important question economists haven’t frequently faced in the past: Can a recession really be a recession if everyone still has a job?
(contributing writer, Brooke Bell)