(NewsNation) — America’s hiring boom continued as employers added 528,000 jobs in July, outpacing expectations amid skyrocketing inflation and mounting fears of a recession.
The U.S. economy shrank in the first two quarters of 2022 — an informal definition of recession. But most economists believe the strong jobs market has kept the economy from slipping into a downturn.
The American job market has repeatedly defied skeptics this year. Forecasters, on average, expected the economy to have picked up another 250,000 jobs, according to a survey by the data firm FactSet.
The resiliency of the current labor market, especially the low jobless rate — is the biggest reason most economists don’t believe a downturn has started yet, though they increasingly fear that one is on the way. History isn’t entirely reassuring: The unemployment rate was even lower — 3.5% — when an 11-month recession began in December 1969.
The pandemic brought economic life to a near standstill as companies shut down and consumers stayed home. In March and April 2020, American employers slashed a staggering 22 million jobs and the economy plunged into a deep, two-month recession.
But massive government aid — and the Federal Reserve’s decision to slash interest rates and pour money into financial markets — fueled a surprisingly quick recovery. Caught off guard by the strength of the rebound, factories, shops, ports and freight yards were overwhelmed with orders and scrambled to bring back the workers they furloughed when COVID hit.
The result has been shortages of workers and supplies, delayed shipments — and rising 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 inflation’s resurgence, thinking prices were rising because of temporary supply chain bottlenecks. It has since acknowledged that the current spate of inflation is not, as it was once referred to, “ transitory.”
There are, of course, political implications in the numbers being released Friday: Rising prices and the risk of recession are likely to weigh on voters in November’s midterm elections, potentially making it tougher for President Joe Biden’s Democrats to maintain control of Congress.
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