US economy added a paltry 114,000 jobs in July, unemployment spikes to 4.3%
The US economy saw a significant slowdo𝐆wn in hiring last month that has reignited fears of a recession – leadꦇing to a massive sell-off on Wall Street and calls for the Federal Reserve to increase the size of its expected rate cuts.
The Dow Jones Indus𝄹trial Average fell more than 600 points, extending its two-day loss to more than 1,1🔯00, while the tech-heavy Nasdaq🦹 moved into correction territory by shedding nearly 2.5% on Friday.
The across-th✤e-board declines followed a July jobs report showing that the economy created just 114,000 new positions last month – well off from analyst estimates of 175,000 jobs.
Unemployment also rose last month to 4.3% – worse than the 4.1% predicted by an🐼alysts.
The Fed, which kept decades-high interest rates unchanged after their two-day meeting this week, now faces the prospect of the “soft landing” chair Jerome Powell has tried to engi🐬neer to prove elusive.
“The Fed 𝐆appears to have left rates too high for too long in their ef💛fort to fight high post-COVID inflation, largely by design,” Anthony Scaramucci, founder of Skybridge Capital, told The Post.
Scaramucci, who had a very brief stint in the Trump administration, added: “Now that we’re seeing signs of a harder economic landing with the latest jobs report together with less inflation, they will likely be aggressive in cutting rates back to a healthier equilibrium.”
Economists at leading banks including Bank of America, Citigroup, Goldman Sachs and ღJPMorgan Chase seemed to agree.
Citigroup analysts are now pricing in half-point rate cuts in September and November as well as a qu🐬aไrter-point cut in December – up from the quarter-point cuts that were predicted at all three meetings.
Michaelജ Feroli, an economist at JPMorgan, predicted half-point rate🌠 cuts in September and November followed by quarter-point cuts at every subsequent meeting.
“With the benefit of hindsight, it’s easy to say the Fed should🅰 have cut this week,” Feroli wrot🐽e.
“Even if t♛he softening in labor market conditions moderates from here going forward, it would seem the Fed is at least 100 basis points offsides, probably more.”
Economists at Goldman led by Jan Hatzius, who previously predicted rate cuts in🐟 September 🀅and December, added a third reduction in November.
The revised outlooks come as hiring plunged in nearly every sector, according to data released ♌Friday by the Labor D꧙epartment’s Bureau of Labor Statistics.
The information sector – which encompasses the film a🍷nd television industry, music, publishing, and tech – lost 20,000 jobs in July, compared to adding 1൲,000 jobs in June.
Fin♐ancial services went from a net gain of 10,000 jobs in June ✱to a loss of 4,000 jobs last month.
The worse than expected unemployment rate also triggered worries about the so-called Sahm rule, an indicator popularized by economist Claudia Sahm, which says that if the average of the unemployment rate over three months rises a🌊 half-🎃percentage point or more above the lowest the three-month average went over the previous year, the economy is in a recession.
Over the past three months, the unemployment rate has avera𒈔ged 4.13% — 0.53 percentage point above the t🐷hree-month average low of 3.6% over the past year.
Powell characterized the Sahm rule as a “statistical regularity” on Wednesday. “It’s ♛not like an economic rule, where it’s telling you something must happen,” he said.
With Post Wires
