Despite the raging inflation and a looming recession, US employers generated 528,000 more jobs in July. This employment rate increase helped make up for jobs employees lost during the Covid-19 pandemic outbreak. For that reason, the US unemployment rate dropped to 3.5%, which marked the lowest report since early 2020 after the outbreak. June recorded 130,000 fewer jobs since February. Well, the US economy complied with the informal definition of recession by shrinking in the first two quarters of 2022. Analysts say this robust jobs market might rescue the economy from a downturn.
Americans are increasingly anxious regarding the risk of inflation and rising prices. Thus, the latest reports will impact the midterm elections in November when president Joe Biden and the Democrats race to control Congress. The president boosted US job growth with a $1 trillion bipartisan infrastructure law and $1.9 trillion coronavirus relief package. Nevertheless, some analysts and republican lawmakers are concerned about this government spending. They blame it for the ongoing highest inflation rate in 40 years.
Most Americans are struggling with a soaring inflation rate and the power of the fading paycheck. In any case, hourly earnings increased by about 0.5% translating to a 5.2% increase within the last year. The slight increase is not good enough to combat the level of inflation. Therefore, low income Americans are constantly struggling with high prices in school supplies, at the gasoline station, and the supermarket. The Labor Department also recorded 28,000 more jobs in May and June. Further info showcases that restaurants, hotels, and the healthcare industry generated more jobs in the last month.
Analysis shows that the unemployment rate fell while around 179,000 Americans got employment to drop the number of unemployed to 242,000. Unfortunately, 61,000 lost their job opportunities in July. These stats trimmed the share of employed or hunting jobs from 62.1% to 62.2% in June. Although a strong employment market would make it better for the US, it might imply the Federal Reserve will raise the interest rates again. For that reason, several US markets now display the interest rate hikes dichotomy. In other words, stocks dropped as traders were wary of Fed's aggressive rate hikes.
Such movements in the trading markets might threaten fast-growing companies such as tech stocks. For instance, the S&P 500 plunged by 0.7%. On the other hand, treasury yields increased since traders scrambled to bet on Federal Reserve interest hikes next month. The economic skeleton is troubling with the Gross Domestic Product, measuring total economic output, falling in both the second and first quarters. Surprisingly, two consecutive GDP drops can define a recession. Above all, most analysts believe that the increase in job opportunities indicates that the economy will evade a recession. However, some are still worried that a recession might occur.
