The U.S. economy added 372,000 jobs in June 2022, according to a new tally released today by the government. Meanwhile, the unemployment rate held steady at 3.6 percent, which is near the lowest level in a half-century. That’s good news for recession worries but worrisome for workers and employers, explain CEI experts.
Statement by Senior Fellow Ryan Young:
“The big question is whether or not the economy is in recession. Today’s employment numbers don’t answer that question but bode well for how policymakers will take action. For example, a strong labor market helps the Fed feel it can act more boldly to contain inflation at its next meeting on July 26-27. In the long run, price stability is more important than any recession risk. June job numbers are helpful on that front.
“Next up, GDP numbers come out on July 28. Even if growth stays negative for a second straight quarter, the consistent strength of the labor market might lead the National Bureau of Economic Research to say the economy is not in recession—two straight quarters of contraction do not automatically indicate a recession, contrary to popular belief. And if there is a recession, employment numbers are a lagging indicator. Strong numbers now mean that any potential recession is likely to be short.
“There are a lot of moving parts, and the economy has its troubles, especially inflation. But 3.6 percent unemployment, plus plenty of job openings to go around, are good signs. Policymakers should feel confident in addressing inflation, and can further help by removing unneeded frictions in labor markets such as excessive occupational licenses, trade barriers, and other regulations.”
Statement by Sean Higgins, CEI research associate:
“Today’s job numbers from the Labor Department show an economy that is still growing, but the underlying data reveals worrying signs.
“The nation added 372,000 jobs in June, keeping the official unemployment rate at 3.6 percent for the fourth month in a row. The other good news is that many people are transitioning to better jobs. The number of persons employed part time for economic reasons declined by 707,000 last month, to 3.6 million, well below the pre-pandemic level of 4.4 million in February 2020.
“However, the labor force participation rate didn’t budge at 62.2 percent, still below pre-pandemic levels. The number of persons not currently working but who say they want a job was also unchanged at 5.7 million, up 700,000 from pre-pandemic levels, and the number of persons who claimed they had been unable to work because their employer closed or lost business due to the pandemic surprisingly backslid in June to 2.1 million, up 300,000, indicating that even now the pandemic remains a drag on growth.
“In short, people are still looking for jobs and employers are still hiring but both sides are having trouble meeting each other halfway and the pandemic is still disrupting usual business. With inflation on the rise, job-seekers likely want better offers that not all employers can afford to give. Some employers are pulling back and looking for other ways to get by without filling vacancies. The best thing policymakers can do to alleviate this impasse is address inflation through lifting trade barriers, avoiding new ‘windfall profits’ energy taxes and other regulations.”