After the United States job market's explosion in July, experts are beginning to believe that a recession right now would be unlike any before.
In July, 528,000 jobs were added to the market, according to the Bureau of Labor Statistics (BLS). This contrasts sharply with the 372,000 jobs added in June and the 390,000 jobs added in May. Unemployment also dropped to 3.5% over the past month. In light of this data, many experts, including Federal Reserve Chairman Jerome Powell, are arguing that a recession is off the table, at least for the moment. Too many areas of the economy are performing well for a recession even to be possible, Powell told reporters at a press conference in July. Despite the Federal government raising benchmark interest rates last month and two consecutive quarters of negative GDP growth, Powell adds, the strong jobs market means a recession is highly unlikely.
Economists are balking at other odd parts of this economic equation. Large companies in the tech sector, such as Netflix and Robinhood, have both laid off workers as the BLS reports that wages continue to grow. Hourly earnings leaped up half a percent from June and are now up 5.2% year over year (YOY). Additionally, inflation is unsustainable, topping out at 9.1% in July.
All of these facets together are baffling economists, many of whom aren't sure what the future holds. Bledi Taska, Chief Economist at Lightcast, says that layoffs in the tech sector won't bleed into other industries and that new jobs indicate that these roles are still in high demand. Additionally, this kind of job growth isn't something that's ever been seen before a recession, says Brad McMillan, Chief Investment Officer at Commonwealth Financial Network. McMillan adds that rising rates, in conjunction with a strong market, is actually a positive series of events—even if the market needs time to adjust in the short term.