Subhi Agrawal
In August, the U.S. economy added 142,000 jobs, and the unemployment rate edged down to 4.2%, according to the Bureau of Labor Statistics. Although this indicates continued growth, the data heightens concerns about a potential slowdown in an otherwise stable labor market.
Unemployment Rate Saw Little Change
Economists had speculated a strong jobs report, forecasting the addition of 161,000 jobs. Although the unemployment rate saw little change, Friday’s September 6, report revealed substantial downward revisions to the job figures for both June and July.
“The chief worry among Americans has been high prices, the result of inflation. The state of the job market is now competing for their attention,” Mark Hamrick, senior economic analyst at Bankrate, said, reported by NBC News.
While unemployment remains low, it has been going upward for much of this year after a surge in job growth during the U.S.’s broader economic recovery from the Covid pandemic. This gradual rise suggests that the labor market is cooling after the earlier boom.
Economists and analysts who keep monitoring the monthly report were under more scrutiny as they expected that the Federal Reserve would soon cut interest rates to boost economic growth. Presidential campaigns of Vice President Kamala Harris and former President Donald Trump are also pointing out the issues. After Friday, September 6, before Election Day there will be just two more monthly jobs reports.
Stock Prices Are Declining
Stock prices are going down and U.S. Treasury yields dropping, the markets responded negatively following the news. This results in investors looking for the safer side rather than the risky.
Businesses are “laying off workers like it’s a boom and hiring like it’s a recession,” Dario Perkins, managing director at TS Lombard financial firm stated in a post on X.
According to NBC News, Mark Zandi, chief economist at Moody’s Analytics group said, “It wouldn’t take a whole lot to upset that story and see companies start pulling back and laying off. The labor market is good, but it feels like a fragile good.”
The rate of unemployment is still above 7 million Americans, seeking jobs. Any potential financial relief will not be immediate. The Fed’s policy actions take time to influence the economy, especially with the current interest rate already at 5.5%.
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