US employment growth has been flat – and Mark Zandi thinks that June may have been the start of a recession
The American economy added only 22,000 jobs in August, and the previous months were revised again lower, reporting a recession that may have already started.
The gain last month was much lower than the expectations of around 75,000, and the unemployment rate reached 4.3%, the highest it was in almost four years, according to the Bureau of Labor Statistics.
“It is clear that the labor market is in trouble,” said Mark Zandi, chief economist of Moody’s analytics Fortune. “The economy is at the limit of the recession: in fact, we can already be in one. As other revisions arrive, this will probably show that employment decrease coherently. ”
The low August count followed the revisions downwards in previous months. June was retired to show a net job loss of 13,000 – the first decline since 2020 – while the July gain was pushed above, leaving a global employment of 21,000 lower than that previously reported.
Zandi described the loss of June particularly important: “Historically, when the recessions are dated, they are dated from the first month of drop in payroll. This suggests that if we are going in recession, it started in June. ”
The low assembly strengthens an image of a labor market which has almost entirely lost the momentum. Hiring in health care and social assistance has made it possible to stimulate modest, but it was largely offset by the drop in the wicks of the pay of the federal government and a continuous weakness of the energy and manufacturing sectors.
A strike in the transport equipment sector alone has erased around 15,000 factory jobs, BLS said in its report. The wholesale trade has also thrown workers.
Despite the slowdown, the layoffs remain moderate, a dynamic Zandi describes as a “firewall” holding a deeper slowdown.
“Companies have not yet panicked,” he said. “It’s just that they have become more cautious in their hiring. This firewall between a dropout economy and a recession was not raped, but it is very, very close.”
Cooling labor market
Cracks on the job market become more difficult to ignore. Long -term unemployment has checked above in the past year, and more than 6 million people outside the working population now say they want a job, against around 5.7 million about a year ago, according to BLS.
“It really looks like a job recession,” said Zandi. “Employment is stable downwards. Production and income is still increasing, but the economy is incredibly vulnerable. Nothing else can go wrong, or it could give us a complete slowdown. ”
Investors are betting that the slowdown will force the Fed’s hand. The yield on the 10 -year treasure note reached a five -month bottom after the release as traders at the cost of multiple interest rate reductions before the end of the year. Zandi agreed that the chances were high.
“We will certainly have a cup,” he said, adding that the quarter-point movements in September, October and December are likely. “Lases rate will help amortize things, but they will not save the economy. The die was launched. “
Independence nourished
Zandi warned that the challenges of the federal reserve go beyond the management of inflation and growth.
“I think the Fed desperately wants to avoid a slowdown, because it will only increase the pressure on its independence,” he said.
If the economy slips into the recession, he added, the Central Bank could face increasing political attacks, in particular from a white house which has tried to reshape the federal reserve with recent measures, such as the attempted dismissal the nourished governor Lisa Cook.
“This is their number one priority now: keeping the economy at the end of the recession. It pleads for lower rates despite the higher inflation which is here and likely to come. ”
