US Bank Wealth Management CIO Eric Freedman argues that as “we head into the deepest part of the summer,” inflation and declining savings will continue to weigh on consumers and could prompt more people to return to the workforce.
The Labor Department’s monthly jobs report due out Friday is likely to show US employers hired fewer workers last month than in May, and economists say the slowdown may serve as the latest hint of the recession.
Economists surveyed by Refinitiv forecast the report would show 268,000 nonfarm jobs were added to payrolls in June, which would be slowest in over a year and below 390,000 the previous month.
A man walks past a “now hiring” sign posted outside a restaurant in Arlington, Virginia, on June 3, 2022. (Photo by OLIVIER DOULIERY/AFP via Getty Images/Getty Images)
The labor market -along with the economy in general- is it is expected to cool down as the Federal Reserve continues its campaign of raising interest rates in an effort to combat raging inflation, which is at a 40-year high.
JOB VACANCIES REMAIN NEAR RECORD LEVELS
But there is growing concern that the central bank could go too far in slowing demand and plunging the US into a recession, which is defined by two consecutive quarters of negative gross domestic product growth.
Some analysts point to signs that a recession is here: Last week, the Federal Reserve Bank of Atlanta lowered its GDP forecast for the second quarter to -2.1%.
The Federal Reserve Building in Washington, DC ((AP Photo/Patrick Semansky, File)/Associated Press)
The real-time economic indicator known as GDPNOw is not an official estimate of growth for the quarter ending in June, but if upcoming readings from the Bureau of Labor Statistics confirm that the economy contracted in the second quarter, the targets will have been met. technical criteria for a recession. .
POWELL SAYS THERE IS ‘NO GUARANTEE’ THE FED CAN REDUCE INFLATION WITHOUT HURTING THE LABOR MARKET
The National Bureau of Economic Research (NBER) will make the final determination on whether the economy has entered a recession, which the agency says is characterized by high unemployment, low or negative GDP growth, falling revenues and a slowdown in retail sales.
A “We’re Hiring” sign outside a Walmart store in Torrance, California, U.S., on Sunday, May 15, 2022. (Bing Guan/Bloomberg via Getty Images/Getty Images)
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Initial jobless claims rose to a six-month high of 235,000 last week, beating the estimate of 230,000 and signaling that the labor market remains tight but labor demand is cooling.
Megan Henney of FOX Business contributed to this report.
