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What are the latest unemployment statistics?
As of July 2024, the unemployment rate in the U.S. has risen to 4.3%. This increase is a significant indicator of the job market's weakening, as job growth fell short of expectations with only 114,000 jobs added during the month.
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How does the Sahm Rule indicate a recession?
The Sahm Rule, created by economist Claudia Sahm, is triggered when the unemployment rate rises by 0.5 percentage points or more from its low over the previous 12 months. Its activation suggests a potential recession, as it has historically been a reliable indicator of economic downturns.
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What might the Federal Reserve do next?
In light of the recent job data, analysts predict that the Federal Reserve may implement a substantial interest rate cut in September 2024. This action is seen as necessary to support the economy and counteract the negative effects of high borrowing costs that have constrained hiring.
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Why is the job market cooling?
The cooling labor market is largely attributed to high interest rates aimed at controlling inflation. These elevated rates have made borrowing more expensive, leading to reduced hiring and overall job growth, which is reflected in the disappointing job figures for July.
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What do economists say about the current job market?
Economists have mixed views on the current job market. While some, like Claudia Sahm, express concern over the rising unemployment, others, such as Oliver Allen from Pantheon Macroeconomics, suggest that the increased labor supply from immigration may mitigate the severity of the situation.