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During the month of July, the economy added 528,000 new jobs, bringing U.S. unemployment back to pre-pandemic levels, placing the unemployment rate at 3.5%, according to data from the Bureau of Labor Statistics.
With this gain in the number of new jobs in the economy, the Federal Reserve (Fed) is fulfilling its mandate to bring U.S. unemployment to pre-pandemic levels. In return, the country has been swamped with inflation totaling 9.1% year-over-year for the month of June.
This job recovery took nearly two and a half years in which the U.S. experienced the most accelerated hiring of any period in the last 70 years.
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Despite the surprising hiring, many post-pandemic Americans decided to retire prematurely, or have not returned to looking for work, so labor participation—which measures the number of people working or actively looking for a job—includes 623,000 fewer people than in February 2020.
Wages also grew at an accelerated pace, and from a year ago to June 2022 the average wage in America increased by 5.2%, however, rising prices erased those extra gains in workers’ pockets.
The leading sectors in the U.S. job recovery were leisure and entertainment, which added more than 96,000 jobs during June. This sector suffered one of the largest employee losses during the pandemic and still remains 1,200,000 jobs below its February 2020 levels.
In business and professional services, more than 89,000 people found jobs in July, with management positions leading the job recovery in that sector. In the healthcare industry, 70,000 professionals were employed primarily in ambulatory care services and to a lesser extent in hospitals.
Despite the job recovery in July, claims for unemployment assistance are beginning to rise slightly, while open vacancies are beginning to decline, dropping from a peak of 11.9 million in May to 10.3 million during July. This is the lowest number of job openings for six months in the United States.
U.S. unemployment decline may soon be over
The full recovery of the U.S. labor market may signal the Fed to continue to press ahead with its monetary tightening policy, which means putting a halt to the economy’s growth.
Technically, the U.S. has entered a recession after adjusting for its second consecutive quarter of negative growth. However, the Biden administration insists that there is no recession at present and argues that unemployment indicators do not point to such a scenario.
Officially, the National Bureau of Economic Research is in charge of determining whether the U.S. is in a recession, and it may take months for the Bureau to make a pronouncement after the growth data is released.
Although the U.S. has returned to pre-pandemic unemployment levels, some large employers such as Walmart have begun to lay off some of their staff, due to the low level of profits during the last quarter. A number of technology companies such as Netflix, Microsoft, or Meta have also laid off some of their staff or stopped hiring during the last few months due to weak economic indicators and weak corporate earnings.
In the event of a drop in consumption and aggregate demand, the jobs recovery could not only soon come to an end, but also begin to reverse. Although the signs are still faint, the economy is entering a process of little or no growth that may cost many more Americans their jobs in the future.
Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica