Defying anxiety about a possible recession and raging inflation, America’s employers added a stunning 528,000 jobs last month, restoring all the jobs lost in the coronavirus recession. Unemployment fell to 3.5%, lowest since the pandemic struck in early 2020. July’s job creation was 130,000 more than than those produced in June, and the most since February.
The red-hot jobs numbers from the Labour Department on Friday arrive amid a growing consensus that the U.S. economy is losing momentum. The U.S. economy shrank in the first two quarters of 2022 — an informal definition of recession. But most economists believe the strong jobs market has kept the economy from slipping into a downturn. Friday’s surprisingly strong report will undoubtedly intensify the debate over whether America is in a recession or not. “Recession – what recession?” wrote Brian Coulton, chief economist at Fitch Ratings, after the numbers came out. “The U.S. economy is creating new jobs at an annual rate of 6 million – that’s three times faster than what we normally see historically in a good year. ‘ Economists had expected only 250,000 new jobs this month.
There are, of course, political implications in the jobs numbers Friday: Americans have grown increasingly anxious about rising prices and the risk of recession. It most certainly be at the forefront of the minds of voters during November’s midterm elections as President Joe Biden’s Democrats seek to maintain control of Congress. Biden took credit for the resilient labour market Friday, saying “it’s the result of my economic plan.” The president has boosted job growth through his $1.9 coronavirus relief package and $1 billion bipartisan infrastructure law last year. Republican lawmakers and some leading economists, however, point to that government spending as the reason for current inflation levels which haven’t been seen in 40 years. And for millions of Americans, it is the fading power of paychecks amid soaring inflation that remains front and centre.
Hourly earnings posted a healthy 0.5% gain last month and are up 5.2% over the past year. That is not enough to keep up with inflation which means many Americans, especially the poorest, are having to scrimp in the face of high prices at the supermarket, gasoline station and even school supplies. “There’s more work to do, but today’s jobs report shows we are making significant progress for working families,” Biden said Friday. The Labour Department also revised May and June hiring, saying an extra 28,000 jobs were created in those months. Job growth was especially strong last month in the healthcare industry and at hotels and restaurants. The jobless rate fell as the number of Americans saying they had jobs rose by 179,000 and the number saying they were unemployed dropped by 242,000. But 61,000 Americans dropped out of the labour force in July, trimming the share of those working or looking for work to 62.1% last month from 62.2% in June.