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The Line: The Labor Market Comes to the Rescue Again

Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.



Payrolls rose by 528,000 in July, more than double the Dow Jones estimate. This is pretty amazing considering the GDP data for the first half of the year. As I said last week, the strong performance of the labor market is why many economists are saying we are not in a recession, and it looks like they may be right.


Here are the highlights of the report:


  • Employment is back to its pre-pandemic level.

  • The U.S. has added just under 3.2 million jobs in 2022, an average of 471,000 per month.

  • The unemployment rate ticked down to 3.5%, matching the 50-year low reached right before COVID-19.

  • Wages rose 0.5% last month and are up 5.2% over the past year.

  • Leisure and hospitality (+96,000) and professional and business services (+89,000) posted the biggest employment gains last month.


Does any of this indicate a recession?


It’s all good news on the jobs front, and if the above data isn’t enough to convince you, here are two other tidbits from this week:


The only downer here is how Wall Street reacted to this great news. Dow futures fell 200 points after the much-better-than-expected report came out. Why? The report will most likely keep the Fed hiking aggressively over the next few months, with a 0.75% increase in September looking certain. And as we all know, Wall Street—along with most of us—hates it when the Fed hikes rates.


So, let the recession debate continue. For so many of us, it certainly feels like a recession, as prices are growing much faster than wages. We eat out less, and even with their recent decline, gas prices are still sky high. Consumers have managed to keep spending so far, but how much longer can that last?


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Rick Sanchez
Dec 18, 2023

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