What to expect from the July job report

Wall Street will get another chance to figure out the state of the job market this week.

The Bureau of Labor Statistics is due to release its July nonfarm payrolls report on Friday. It is a monthly survey based on questionnaires sent to US companies to determine the net number of jobs created by the private sector each month. Private job creation is vital to any economy as it is the source of income growth and consumer spending that drives GDP growth.

Markets expect the economy added between 250,000 and 290,000 jobs in July, according to two forecasts by Trading Economics. That’s well below the 372,000 jobs the economy added in June.

Dan North, senior economist at commercial credit insurer Allianz Trade North America, expects the economy to create 250,000 people and the unemployment rate to remain at 3.6%.

“This would normally be a very strong report, but beneath the surface there are signs that cracks are developing in the job market,” North told the International Business Times in an email.

“First, the unemployment rate is almost useless because it doesn’t take into account everyone who is not in the labor force. Worse, it’s a lagging indicator. It tells us what has already happened. Job growth is at best a random indicator, so it tells us what’s happening right now. And note that as of March 2020, this labor market has not created any more jobs, only regained jobs. The hard part of creating jobs is coming, and it’s going to be tough,” North said.

Still, there is a long list of companies that have announced significant job cuts, such as Ford (8,000 jobs), Loan Depot (2,000 jobs), and Coinbase (1,100 jobs). And there’s another long list of companies reporting hiring freezes — Alphabet, Amazon, and Meta, to name a few — meaning forecasters may be overly optimistic in their July jobs projections.

If this is the case and job growth stagnates or even turns negative, it is another indicator that the US is already in a recession.

GDP fell for the second straight quarter, suggesting that the economy is already in a narrower sense of recession.

But that doesn’t necessarily have to be bad news for Wall Street, since a recession is usually the best cure for inflation, which is now the dominant economic evil, crushing family budgets and hurting sales at companies that sell discretionary items.

The problem is that this remedy can be worse than the evil it helps kill. For many Americans, a no-paycheck situation is far worse than a paycheck-less situation. What to expect from the July job report

Fry Electronics Team

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