The U.S. economy experienced a significant slowdown in job growth in July, adding only 114,000 jobs, falling short of Wall Street's expectations and reflecting the impact of rising interest rates on hiring. This marks a sharp deceleration from the previous months, signaling potential challenges ahead for the labor market.
The unemployment rate also ticked up to 4.3%, a rise from June’s 4.1%, further indicating a cooling in the job market. Despite the increase in unemployment, some sectors continued to show resilience. For instance, the construction industry maintained robust employment levels, partly due to a backlog in multifamily housing projects.
The U.S. economy is in a really scary place. We are so distracted by the new cycle that we forget the reality we are living in. Here are 3 charts to think about today:
1. We currently have the longest inverted yield curve in history. This means that long term interest rates are… pic.twitter.com/smvx17SqGS— Andrew Laddusaw (@AndrewLaddusaw) July 31, 2024
Economic analysts had anticipated about 200,000 new jobs for July, making the actual figures a disappointment. Brian Marks, executive director of the University of New Haven’s Entrepreneurship and Innovation Program, noted that while the job market remains resilient, the data reflects a cooling economy.
This sentiment is echoed by other experts who see these numbers as a sign that the Federal Reserve's rate hikes are starting to bite.
🇺🇸 U.S National Debt Hits $35 Trillion! 📉#USDebt #Economy pic.twitter.com/4i2OgaxtDY
— Polo Ventures (@PoloVentures) July 30, 2024
President Joe Biden highlighted the broader context of job growth during his administration, emphasizing that a record 15.7 million jobs have been created under his leadership. However, he acknowledged the need for continued efforts to improve economic conditions for American families.
The Federal Reserve, which has been closely monitoring job growth and inflation, is likely to interpret July’s figures as evidence that its policies are tempering economic activity. While the Fed has held interest rates steady, it remains cautious, looking for more substantial proof that inflation is under control before considering rate cuts.
The report also pointed out disparities in unemployment rates among different racial and ethnic groups, with a slight uptick across the board. This suggests that while the overall job market is cooling, some demographics are feeling the impact more acutely.
In summary, July’s job report underscores a significant slowdown in the U.S. labor market, influenced by higher interest rates and a cooling economy. The increase in the unemployment rate and the lower-than-expected job additions highlight the ongoing challenges facing the economic recovery.
Those are just the ‘Official’ stats. There are plenty of people working but not ‘officially’. Many have side-gigs that are ‘cash-only’ so they and their employers don’t have to pay FICA, income taxes, state and local taxes. Also, many illegal aliens are working jobs as ‘ghost’ employees being paid in cash so that their employers don’t have to pay into FICA and other mandatory benefit packages. Even in a good economy, there have always been ‘cash-only’ jobs to circumvent taxes. With a bad economy, inflation and more government regulations, those ‘ghost’ jobs are on the increase.