(NewsNation) – The U.S. hiring boom continued as employers added 528,000 jobs in July, beating expectations amid soaring inflation and growing fears of a recession.
Friday’s report from the Labor Department showed the unemployment rate edged down to 3.5%, lower than the last four reports and the lowest level since the pandemic erupted two years ago.
Leisure and hospitality, as well as the healthcare and business services sectors, saw the largest labor market gains, after struggling hard during the pandemic.
However, the labor market is not recovering evenly as people in other industries continue to seek work.
Dallas resident Sam Hudson quit his job at a major accounting firm to move into commercial real estate and said he was surprised by the employment report because despite passing all of his CPA exams and owning a master’s degree in accounting, he struggles to find even an entry-level position.
“I know it has to do with interest rates, but you would always think that an industry that is so hot…there would be someone looking for someone with good experience, ready to work tough, and it’s been tough,” Hudson said.
The US economy contracted in the first two quarters of 2022 – an informal definition of recession. But most economists believe the strength in the labor market has kept the economy from slipping into a slowdown.
The US labor market has repeatedly defied skeptics this year. Forecasters on average expected the economy to add 250,000 more jobs, according to a survey by data firm FactSet.
The resilience of the current labor market, in particular the low unemployment rate, is the main reason why most economists do not believe a downturn has begun yet, despite growing fears that it may occur. The story is not entirely reassuring: the unemployment rate was even lower – 3.5% – when an 11-month recession began in December 1969.
The pandemic has brought economic life to a virtual standstill, with businesses closing and consumers staying home. In March and April 2020, US employers cut 22 million jobs and the economy plunged into a deep two-month recession.
But massive government aid — and the Federal Reserve’s decision to cut interest rates and pump money into financial markets — fueled a surprisingly quick recovery. Caught off guard by the strength of the rebound, factories, stores, ports and freight yards were overwhelmed with orders and rushed to bring back workers they furloughed when COVID hit.
This resulted in a shortage of labor and supplies, delayed deliveries and higher prices. In the United States, inflation has been rising steadily for more than a year. In June, consumer prices jumped 9.1% from a year earlier, the biggest increase since 1981.
The Fed underestimated the resurgence of inflation, thinking prices were rising due to temporary supply chain bottlenecks. He has since recognized that the current wave of inflation is not, as it was once called, “transitional”.
There are, of course, political implications in the figures released Friday: Rising prices and the risk of recession are expected to weigh on voters in November’s midterm elections, potentially making it harder for President Joe’s Democrats Biden to keep control of Congress.
This story is developing. Refresh for updates.