Monthly Pace Of New-Job Creation Slowed In June, Which Is Good News
Published Friday, July 7, 2023 at: 7:48 PM EDT
The economy created 209,000 new jobs in June, the Bureau of Labor Statistics announced on Friday, indicating the U.S. Federal Reserve’s aggressive monetary policy is finally cooling the hot labor market.
The 209,000 new jobs were slightly less than the 240,000 expected by Wall Street but a strong figure by historical measure. The nation has been adding jobs at a high rate since the pandemic. The 209,000 net new jobs in June is in line with the pace of job creation in the last expansion, but it is the lowest monthly job creation figure released since December 2020.
The hot job market has persisted in 2023 despite the Federal Reserve hiking its benchmark lending rate by 1000% since March 2022 in 10 installments. The surprisingly strong labor market has prevented the economy from rapidly slowing, allowing the Fed to dampen growth and reduce the rate of inflation without tipping the economy into a recession — two or more consecutive quarters of shrinking.
Fed monetary policy mistakes caused every recession since 1950, except for the Covid-19 recession in early 2020. This makes the U.S. central bank’s monetary policy success — so far — a historic accomplishment. The central bankers are well on the way to bringing the high-inflation rate of 2022 down to its target rate of 2% and a recession is not in sight.
The Fed paused on hiking rates at its last meeting on June 13-14. It’s unclear if the Fed will raise rates at its July 25-26 meeting or wait until its September 19-20 meeting. With the labor market still strong and inflation psychology waning, the Fed could just let the 10 previous rate hikes and its other tightening policies continue to dampen growth for longer to wipe lingering inflation from the national psyche before lowering rates in 2024.
The Standard & Poor’s 500 stock index closed Friday at 4398.95, down -0.29% from Thursday, and down -1.16% from a week ago. The index is up +96.61% from the March 23, 2020, bear market low and down -8.29%s from its January 3, 2022, all-time high.
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