Even though policymakers took steps to cool the economy and ease inflation in May, job gains remained strong.
Employers added 390,000 jobs in the month of August.
The unemployment rate is near a half century low. Average hourly earnings for employees increased by 10 cents, or 0.3 percent, on a monthly basis, and were 5.1 percent higher than a year earlier.
Record levels of consumer spending, which makes up about 70% of the economy, have driven business expansion and job creation, as companies try to keep up with demand for a wide variety of goods and services The hiring push has given some workers a degree of agency when it comes to pay and conditions.
The Federal Reserve is concerned that rising labor costs will hurt efforts to bring down inflation, which is close to a 40-year high.
The Fed chair said last month that his institution's attempts to cool off prices were a part of ensuring a more sustainable form of full employment. He wants to have a labor market where people's wages aren't being eaten up by inflation. There is a place where we can have a long expansion as well.
Some economists say that the environment for job seekers is still strong. The Kansas City Fed's labor market conditions index is close to its highest point since 2000.
The president of the Federal Reserve Bank of St. Louis said in a speech this week that the economy would continue to grow.
Fewer Americans will be able to participate in a continued expansion. Lower-income families who have been hit the hardest by price increases are starting to pull back on discretionary purchases. People are having to make difficult decisions about what goods and services to cut back on because of the high cost of groceries.
The Commerce Department reported last week that personal savings as a percentage of disposable income fell to 4% in April due to inflation. It was the lowest rate since 2008 and far from the high of 33 percent in April 2020.
There has been a dichotomy between sour consumer sentiment and positive data throughout the year. The checking accounts are still above the levels of the previous year. The share of households under duress is historically low. Delinquencies on auto loans are low. The New York Fed has been collecting data on new bankruptcies and debt-collection proceedings for over a decade.
The goal of the Fed is to engineer a modest economic downturn. Gregory Daco, the chief economist at EY-Parthenon, insisted that "whether we have a recession, or not, isn't what matters."
cency bias has us thinking of a recession being like the Covid crisis or the global financial crisis, but these were once in a hundred years. The situation was different from the 1970s and lasted 15 years from the late 1960s to the early 1980s with two moderate and two deep recessions.
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