Labour Market Weakens
The US economy created only 22,000 jobs during August, well short of the forecast 75,000, indicating a slowing labour market, Friday’s report by the Bureau of Labor Statistics (BLS) says. The unemployment rate crept up to 4.3 percent, accentuating continued difficulties in creating jobs. Experts warn that the trend, if continued, could point towards larger economic stagnation.
Job growth for the last three months has averaged only 8,000 new jobs per month, showing ongoing weakness in the face of earlier confidence. July’s reading was modestly revised higher, with 79,000 jobs created, up from 73,000 as initially reported, although earlier months were sharply cut the new jobs for May were downgraded to 19,000 from 144,000, and those for June to 14,000 from 147,000.
Economic Pressures Mount
The anemic jobs report arrives while President Donald Trump’s contentious economic policies, including tariffs, mass government firings, cancellation of contracts, and enhanced immigration enforcement, are in effect. Economists had previously warned that these actions would stifle hiring, curb economic growth, and increase inflation conditions that can lead to stagflation, or high inflation concurrent with slow growth.
Core inflation rose 3.1 percent year-over-year in July, the sharpest rise in six months and firming up fears of sustained inflationary pressures. Increasing costs, along with subdued job growth, are creating a precarious balancing act for policymakers.
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Recession Fears Intensify
The warning lights for the US economy are now flashing red with growing intensity. Mark Zandi, Moody’s Chief Economist, has said that almost a third of US states are already in recession-like conditions. Moody’s has also increased the chances of a national recession in the next 12 months to 49 percent as concern about the path of the economy is on the rise.
With recruitment slowing and inflation continuing to be high, economists are warning of the need for near-term policy action to avoid a more severe slowdown. Both businesses and consumers are monitoring the labour market closely, which continues to be a bellwether of economic health and future growth.
