"For months-perhaps even years now-the labor market has trucked along and allowed the Federal Reserve headspace to contend with its favorite problem child: Inflation. But more recently, data in the labor sector has weakened. So much so that the Federal Open Market Committee (FOMC) could be forced back to weighing both sides of its mandate (maximum employment and inflation at 2%) equally. To stabilize the former might require them to cut rates."
"New jobs came from the healthcare and social assistance sectors, while federal government continued to lose roles. Two points which will stand out to economists are the demographics where unemployment is growing. The BLS reported that last month the number of unemployed new entrants (people searching for their first job) increased by 275,000 to 985,000. Moreover, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 179,000 to 1.8 million-now accounting for approximately 25% of all unemployed people."
Labor-market indicators have weakened, prompting concerns the Federal Reserve may need to prioritize employment and consider interest-rate cuts. July nonfarm payrolls rose by a subdued 73,000 while the unemployment rate remained at 4.2%. Job gains were concentrated in healthcare and social assistance, and federal government employment declined. Unemployed new entrants increased by 275,000 to 985,000, and long-term unemployed rose by 179,000 to 1.8 million, about 25% of total unemployed. Job openings fell from 7.36 million to 7.18 million. Economists cite policy uncertainty and AI disruption weighing on hiring, with recent college graduates hardest hit and the equilibrium described as fragile.
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