People walk past a "now hiring" sign posted outside of a restaurant in Arlington, Virginia on June 3, 2022.
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Strong US employment gains will keep pressure on the Fed to continue with its interest rate hikes. Major US indexes saw moderate declines as investors digested the data.
Also putting pressure on stocks was the Democrats’ Inflation Reduction Act, which seems to now have full support of all 50 Senate Democrats needed to pass the reconciliation bill.
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The US added 528,000 jobs in July, exceeding the median estimate of 250,000 new payrolls. The unemployment rate fell to 3.5%, landing below the 3.6% forecast.
The report shows job creation rebounding despite rising interest rates and slower growth.
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Wall Street and the Fed are at an impasse, and the solution will almost surely hurt investors.
Stocks recently surged on hopes that the central bank will start cutting rates in 2023. But Fed officials have clarified that the hiking cycle is far from over.
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Joblessness, not inflation, is the biggest threat to the economy, some experts say.
Fed Chair Jerome Powell has frequently pointed to the labor market’s strength as a sign that the economy can shoulder the burden of higher rates, but the central bank is walking a tightrope in its fight against inflation. The odds of a recession are rising among many Wall Street analysts.
Americans still aren’t staying in their jobs, even as fears of a recession settle over the economy.
In June, 4.2 million people quit their jobs, according to new data out from the Bureau of Labor Statistics.
At the same time, hiring wasn’t slowing down: 6.4 million Americans were hired in June, and the layoff rate stayed low at 0.9%. That means that, even as some do see layoffs and hiring slowdowns, workers for the most part aren’t worried about walking away from their jobs.
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Job openings tumbled to 10.7 million from 11.3 million in June, according to Job Openings and Labor Turnover Survey data published Tuesday morning.That’s below median estimates of 11 million.
The data hints that the labor shortage may be waning, as the number of unemployed Americans per job opening climbed to 0.6 in June from 0.5.
The economy is shrinking, and Americans increasingly fear a recession is either on the horizon or already here. Yet the stock market is positively thriving.
The S&P 500 was up over 9% in July, staging its biggest one-month rally since 2020. Investors are trying to regain its footing after a brutal first half of the year, but economists stress that the market is not the economy and warn that data still shows an uncomfortably high likelihood of a recession.