Are there really more people working than at any time in American history, as President Joe Biden claims?
Searing US jobs numbers for July may have eased worries about a recession, but they also raised the risk of another 75 basis point hike from the Federal Reserve in September. .
U.S. employers added 528,000 jobs in July, beating all estimates, and the unemployment rate edged down to 3.5%, the U.S. Bureau of Labor Statistics said Friday. Leisure and hospitality, professional and business services, and health care saw the strongest job growth overall. The unemployment rate and total non-farm employment both reached pre-pandemic levels in February 2020.
“Not only is 528,000 a big number in the context of the last few months, it’s a blockbuster number compared to what we would have before the pandemic,” said Kenneth McLaughlin, professor of economics at Hunter College in New York. , at Al Jazeera.
“Before the pandemic, if we had 150,000 for that number, say in 2019, that would be really big,” McLaughlin said.
The 528,000 jobs added were more than double the expectations of many seasoned analysts, including at Goldman Sachs, where economists had estimated nonfarm payrolls would rise by 225,000 in July.
The hot wage reports mean the Federal Reserve will continue to raise interest rates in its fight against decades-high inflation. Last week, the US central bank raised rates by 75 basis points. “While another unusually large increase may be appropriate at our next meeting,” that decision would depend on new data, Federal Reserve Chairman Jerome Powell said last Wednesday.
US inflation jumped 9.1% in June from a year earlier, the biggest rise since 1981. Data for July is due out on Wednesday and is expected to show slowing inflation after lower prices gasoline.
The Fed said it would use all its tools to better balance demand with supply to bring inflation down to 2%.
Goldman Sachs economists said on Friday they expect the federal funds rate to rise another 100 basis points over the next three meetings, with a 50 basis point increase in September and a 25 basis point hike in September. basis in November and December.
The numbers explained
Last week, the preliminary estimate released by the US Department of Commerce showed that the economy had slowed for a second straight quarter. Gross domestic product (GDP) fell at an annualized rate of 0.9% after falling 1.6% in the first three months of the year. Typically, two quarters of declining growth indicates that the economy is slowing.
US President Joe Biden, who last week pushed back against the idea that the United States was heading into a recession, took to Twitter to hail Friday’s jobs numbers. “More people are working than at any time in American history,” he wrote.
Today’s jobs report shows the economy added 528,000 jobs in July.
More people are working than at any time in American history. This is no coincidence, these are results.
— President Biden (@POTUS) August 5, 2022
The reason there are more people employed than ever before is because the population has grown, but once that’s factored in, it doesn’t look quite as rosy, McLaughlin explained.
“We haven’t fully recovered from the pandemic and we haven’t even fully recovered from the Great Recession,” he said. “The most important thing for me is the employment rate, which has just reached 60%. It was 61.1% before the pandemic and 63.3% before the Great Recession. »
The employment rate excludes students, homemakers and retirees.
“That’s why I say the 3.5% unemployment rate is incredibly insane in a historical context. And it is, but it doesn’t really tell the whole story.