The American job market is losing momentum. Today, Americans will understand just how much.
The Bureau of Labor Statistics is expected to release employment data, including the unemployment rate, for August. In July, the rate was 4.3%, up from 4.1% in June and the highest level since September 2017, excluding the peak of the Covid-19 pandemic — though still low by historical standards. Wall Street expects the report to show an increase of 161,000 jobs, with the unemployment rate falling to 4.2%, according to Dow Jones.
The jobs report will be under even closer scrutiny Friday, as the Federal Reserve approaches an expected interest rate cut this month and economic issues dominate much of the presidential campaigns of Vice President Kamala Harris and former President Donald Trump. After Friday, there will be only two more monthly jobs reports before Election Day.
The economy is producing mixed signals. Earlier this week, two manufacturing indicators were weak, fueling fears that the economy will slow faster than expected.
On Wednesday, the BLS reported that job openings continued their sharp downward trend, though they remained above pre-pandemic levels. But it showed that the hiring rate for workers in professional and business services — who tend to command higher wages — has reached levels not seen since the Great Recession of 2009.
Yet layoffs remain largely limited — even after increasing last month — as does the number of people filing for unemployment benefits.
Companies are “laying off workers like it’s a boom and hiring like it’s a bust,” Dario Perkins, chief executive of financial firm TS Lombard, said in a message posted on X on Wednesday.
Americans have largely spent their savings accumulated during the pandemic, while borrowing remains constrained by the high interest rate environment. And while inflation has been largely brought back to the Federal Reserve’s 2% target, consumers are still suffering from four years of soaring prices.
Despite these headwinds, there was talk throughout the summer that the U.S. economy had achieved a “soft landing” with relatively low unemployment and inflation.
Stocks also remain near their all-time highs despite some recent turbulence.
Mark Zandi, chief economist at Moody’s Analytics Group, told NBC News that as long as the unemployment rate remains at current levels, he believes a soft landing can be sustained.
But he said that sunny image could easily be spoiled.
“It wouldn’t take much to turn this situation upside down and see companies start pulling back and laying off workers,” Zandi said. “The labor market is good, but it looks fragile.”
The current unemployment rate means that more than 7 million Americans are still unemployed and looking for work. Among them is Cassandra Kelly, a 38-year-old mother of two from New Jersey who told NBC News she has been in the job market for more than a year.
An operations specialist with a background in communications and social media, Kelly said she was getting by on a landlord’s payout, financial support from her partner and occasional freelance gigs. But none of it was enough to cover her expenses.
The full-time positions she sees posted in her field now pay just $45,000 — barely enough to qualify for an apartment in the New York area, Kelly said, adding that some positions come with no benefits, which she needs to support herself and her family’s medical needs.
“Even though I’m willing to go down to $45,000 or $50,000, the amount of work they’re asking for that small amount of money is not fair,” she said. “It breeds resentment. There were times when I wanted to give up.”
There are hopes that the Federal Reserve’s widely expected interest rate cut later this month will ease the drag on growth and ease financial conditions.
If that happens, the cost of borrowing on everything from cars to credit cards will fall. Mortgage rates should also fall, even though the Fed has no direct control over them.
Whatever financial relief might come, the Fed’s policy actions will not have an immediate effect, especially since the current rate of 5.5% is already very high.
“This is not a game-changing event,” Zandi said, meaning it will take time for the economy to adjust to a rate cut in September and any future cuts that could come in November, December and beyond.
nbcnews
