The U.S. Labor Department’s most recent job report shows that the unemployment rate remained unchanged in June.
Last month, employers added 372,000 jobs, with the jobless rate staying at May’s level of 3.6%.
While concerns about inflation have weighed on economists’ predictions for the future, job growth outpaced forecasts by around 100,000. Still, a downturn is still very much a possibility in the near future.
“We’ve essentially ground our way back to where we were pre-Covid,” said Christian Lundblad, a professor of finance at the University of North Carolina’s Kenan-Flagler Business School. “So, this doesn’t necessarily look like a dire situation, despite the fact that we’re struggling with inflation and economic declines in some other dimensions.”
Because wage gains exceeded predictions, the Federal Reserve may have more flexibility to utilize its powers to ward off growing inflation. However, many are anxiously waiting to see whether interest hikes will tip the economy over into the pits of a recession.
Demand for workers has also remained strong, with the Labor Department’s report showing that there are two job openings for every job seeker.
Still, as consumer spending and savings continue to dwindle, the massive job growth seen in the first half of 2022 is unlikely to persist into the latter half of the year. Wages are continuing to climb, but are unable to keep up with the pace of inflation.
“I think it’s inevitable that we’ll see a slowdown,” said Cailin Birch, the lead U.S. analyst for the Economist Intelligence Unit. “The question is whether it’s a slowdown that’s manageable, or if it turns into a collapse.”