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Hiring jumped in July as U.S. economy beats expectations despite inflation and rate hikes

Catherine Rampel:

In general, it was a very strong report. Again, it was a faster pace – a faster hiring pace than expected.

And, in fact, we have now recovered all the jobs lost at the very beginning of the pandemic. But some numbers were a bit worrying. For example, the figures show that the activity rate has decreased.

This means that the share of people who were working or looking for work has decreased. And it’s a bit of a headache, given that the economy is very strong. As I said, there is a huge demand for workers, far more than there are workers available. Normally, this would attract more people to the job market. And, instead, we see the reverse.

And another thing that might be somewhat concerning and kind of counterintuitive is that this jobs report was so robust, it shows the economy is so hot, that it might encourage the Federal Reserve to actually, if not necessarily accelerate the pace of rate hikes, which could at least keep their foot on the brake, which means that if they worry about an overheating economy — and this report continues to show that the market for work is strong, the job market is hot — they might decide they need to cool it down a bit.

And, as a result, you might see those rate hikes, which will be painful. So that’s kind of good/bad news, you almost want a Goldilocks-like report that — where job growth isn’t so strong that it looks like we’re overheating, not so low that it looks like we’re in recession. It’s a steady pace. And we’re more than a steady beat at this point.


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