The latest jobs report reveals a concerning trend in the U.S. labor market, suggesting a softening economy and raising questions about the Biden administration’s portrayal of how great Bidenomics has been.
In July, job growth fell well short of expectations, with employers adding only 114,000 positions – far below the projected 175,000.
This lackluster performance comes alongside an unexpected rise in the unemployment rate to 4.3%, the highest level since October 2021.
Becky Frankiewicz, president of ManPowerGroup North America, put it bluntly: “Temperatures might be hot around the country, but there’s no summer heatwave for the job market.” She noted that recent cooling has erased most of the gains seen earlier in the year.
The weakening job market isn’t occurring in isolation.
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It’s part of a broader economic slowdown, likely influenced by persistent inflation and high interest rates.
The disappointing numbers sent stock futures plummeting, with the Dow shedding over 500 points as recession fears intensified.
Adding to these concerns is the triggering of the Sahm Rule, a historically reliable recession indicator.
This metric suggests a downturn is likely when the three-month average unemployment rate rises half a percentage point above its 12-month low.
July’s report crossed this threshold, with the three-month average hitting 4.13% – 0.63 points higher than last July’s 3.5% rate.
Sahm Rule: triggered https://t.co/011RNsi731 pic.twitter.com/ZdbqvIeCLj
— Gustav Helgesson (@GustavHelgesson) August 2, 2024
While some economists, like Jeffrey Roach of LPL Financial, caution against jumping to conclusions about a recession, he acknowledges that “early warning signs suggest further weakness.”
The Federal Reserve’s actions are now under scrutiny.
Their recent decision to hold interest rates steady at a 23-year high may prove to be too little, too late.
Investors are increasingly betting on a significant rate cut in September, hoping the Fed can course-correct quickly enough.
Seema Shah of Principal Asset Management doesn’t mince words about the situation: “The labor market’s slowdown is now materializing with more clarity. Job gains have dropped below the 150,000 threshold that would be considered consistent with a solid economy.”
While some sectors like healthcare and construction showed growth, others experienced notable losses.
The information sector shed 20,000 jobs, and financial activities lost 4,000 employees.
Perhaps most telling are the downward revisions to previous months’ job numbers.
June’s gains were revised down by 27,000 jobs, while May’s numbers also decreased.
These frequent, significant revisions cast doubt on the reliability of initial reports and suggest the job market may have been weaker than initially portrayed.
New jobs report shows revisions totaling 110,000 fewer jobs for April and May combined.
Biden administration has been lying almost every month about how many jobs they created.
Also, unemployment is up for June and now at a three-year high.pic.twitter.com/GdS8rgLuFB
— Paul A. Szypula 🇺🇸 (@Bubblebathgirl) July 5, 2024
As the economy shows signs of cooling, the disconnect between the Biden administration statements and economic realities becomes more apparent.
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Given the upcoming presidential election in November, it is unlikely Kamala Harris or her media allies will do anything but downplay the truth and tout a nonexistent “good” economy.
