The US economy added 528,000 jobs in July, more than double the number economists had expected.
This surprising increase in employment completes a milestone for the US economy: pre-pandemic employment has now been fully restored.
In February 2020, the last month before the COVID-19 pandemic plunged the US economy into recession, there were 152.504 million people employed in the US
As of July 2022, 152.536 million people in the US were working.
And while the labor market contraction during the pandemic was the sharpest in modern history, the rebound marks the second-fastest labor market recovery since 1981.
In just over two years, we have seen job losses that at one point exceeded 20 million have been completely wiped out.
This recovery is in stark contrast to the malaise we saw in the labor market after the financial crisis, when it took the better part of a decade to recover to pre-crisis employment levels.
The full labor market recovery also comes amid recession fears as the Federal Reserve aggressively raises interest rates to curb inflation, which remains at 40-year highs.
Most economists expected Friday’s jobs report to show a moderation in hiring, especially as some labor market indicators point to a slowdown. The prominent tech sector cuts have also been seen by many as a proverbial canary in the coal mine for the wider economy.
“The unexpected acceleration in nonfarm payrolls growth in July, along with further declines in the unemployment rate and renewed resurgence in wage pressures, make a mockery of claims that the economy is on the brink of the recession,” Michael Pearce. , senior U.S. economist at Capital Economics, wrote in a note after Friday’s report.
According to Pearce, this report also makes it likely that the Fed will raise interest rates by 0.75% at its September meeting. This would mark the third consecutive meeting that the central bank has raised rates by this magnitude.
The story continues
“The July jobs report was an absolute knockout, a huge surprise to the upside relative to my expectations and indeed much of the labor market data released so far,” said Neil Dutta, chief economist at Renaissance Macro, in an email. “That said, this jobs report is consistent with an inflationary boom. The Fed has a lot more work to do and, in a strange way, that the Fed needs to be more aggressive in raising rates, makes the hard landing scenario more likely.”
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