Economist Issues Warning After July Jobs Data: “Could Drag The Entire Economy Under”
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The July jobs data is in – it isn’t good.
Expectations for the jobs number was 175,000 – only 114,000 jobs were created.
The unemployment rate also rose to 4.3%, higher than expected.
The U.S. economy created fewer jobs than expected while the unemployment rate increased, signaling that the labor market could be going through a rapid deceleration at a time when the Federal Reserve could soon be cutting interest rates.
According to the Bureau of Labor Statistics (BLS), there were 114,000 new jobs in July, down from 179,000 in June. This fell short of the consensus estimate of 175,000.
The unemployment rate rose to 4.3 percent, up from 4.1 percent, and higher than economists’ expectations of 4.1 percent. This represents the highest jobless rate since October 2021.
Average hourly earnings eased to a smaller-than-expected pace of 3.6 percent year-over-year. On a monthly basis, average hourly earnings edged up 0.2 percent.
The labor force participation rate inched higher to 62.7 percent, from 62.6 percent. Average weekly hours slipped to 34.2, from 34.3.
Chris Rupkey, chief economist at FwdBonds issued a warning after the data saying, “The risks are decidedly to the downside for the labor markets, and rising joblessness could drag the entire economy under. Job losses of this magnitude have never happened outside of recessions.”
“It looks like the sharper downturn in the labor market that [Federal Reserve Chair Jerome] Powell said they were watching for has just become a reality,” said Chris Rupkey, chief economist at FwdBonds.
“The risks are decidedly to the downside for the labor markets, and rising joblessness could drag the entire economy under. Job losses of this magnitude have never happened outside of recessions,” he wrote in a note Friday.
