Despite worries expressed lately about whether the U. S is sliding
into a recession. Today's surprisingly strong jobs report suggests
otherwise the U. S is average, adding nearly 375,000 new jobs a month
for the past three months, and private sector employment has returned
where it was before the pandemic.
But there are still real concerns and warning signs. Inflation for
one wages continue to climb, but consumer spending and confidence
are down, and the overheated housing market is starting to cool.
To get a better read on all of this. I'm joined by special correspondent
Catherine Rampell. She is a columnist for The Washington Post. Catherine
Thank you so much for being here.
Should we believe our eyes? Is this jobs report As strong as it looks?
It looks pretty good. We have had several months of continued strong
job growth.
We have seen wages continue to go up a little bit slower pace than
in the past. But that may not be such a bad thing. It looks like
unemployment has also remained relatively low.
There are, however some, uh weaker signals. Let's say within this
report, including the fact that the labor force participation rate
declined. And of course, the jobs market is not the only set of indicators
that we look at right now, as you just pointed out.
There are a lot of other mixed signals that we're getting from elsewhere
in the economy on inflation on output on housing and other sectors.
Let me ask you about the strong part of this first, and that is
The jobs. Why are we seeing this? This hike in hiring continuing
month after month.
Well, employers are eager to hire and they are having difficulty
in fact finding enough people to put onto their payrolls in the most
recently available data on vacancies, it looks like they're about
twice as many job openings today or at least as of a couple of months
ago, as there are unemployed workers available to fill
Those openings, so there is still very strong demand for workers
because the economy is still recovering again, despite those concerns
about recession, and it may still be imminent. I don't want to downplay
that.
For now, it still looks like employers are very eager to get more
people onto their payrolls. When you mentioned as you mentioned,
wages are continuing to rise, but But let's talk about you mentioned
the weaker
Uh, signals here. What? What would concern you? Then what should
concern us the most
What? We don't have the inflation data that consumer price index
data yet for the month of June. The real worry is that once again,
we will one of those numbers come in. We will see that in real terms
that is inflation adjusted terms, workers' wages went down that is,
workers are seeing more dollars in their paychecks. But those dollars
aren't stretching as far and as a result, their standards of living
are in fact deteriorating.
So on the one hand, it is nice to see I'm sure that wages are rising,
at least in nominal terms if that pace of wage growth does not keep
up with inflation.
Then it doesn't mean all that much to the typical American. Now the
fact that wage growth is slowing, at least in nominal terms may not
be the worst thing in the world. If you're worried that the economy
is overheating.
Um, there's this fear that members of the Federal Reserve, for example,
and other economists have that you know, you could end up in this
bad state of the world known as a wage price spiral, where basically
Workers are demanding higher wages to keep up with the cost of living.
And so companies raise prices to to be able to pay their workers
more and and it feeds on itself. You don't want to end up in that
state of the world.
So if you do see wage growth cooling a little bit, then then maybe
that should allay some of those concerns about and overheating job
market or an overheating economy. So in terms of recession, that
conversation has been out there. You're saying, uh, it's not happening
right now. But you're saying it's still a very real possibility.
Yes, I think the risks of a recession again, even if it's not right
now have risen quite a bit in the last few months, and that's because
we've been hit with a number of unlucky shocks.
Things like a war, which obviously has other, more tragic, serious
consequences. But that's also increasing the cost of oil food, Other
kinds of commodities and avian flu. Um
The lockdowns in China that are finally abating as well as some other
risks on the horizon. Things like there are labor negotiations at
the West Coast ports, and historically, those have led to some disruptions,
whether an outright strike or a slowdown that if that goes south
that could also disrupt, uh fragile supply chains and drive inflation
higher.
All of those kinds of factors would raise price growth and cause
the Fed to try to stomp on the brakes a little bit more aggressively.
And that's the real risk here that if the Fed needs to slam on the
brakes, then they may not just dampen demand. They may accidentally
tip us into recession, and that's obviously an outcome that nobody
wants. And clearly what you're saying is. This complicates the job
of the Fed.
Already. It's already tricky. It gets even trickier.
Catherine Rampell joining us on this Friday afternoon. Thank you,