US employers posted another healthy month of hiring in June, adding 206,000 jobs and again demonstrating the US economy’s ability to withstand higher interest rates.
Job growth last month marked a decline from 218,000 in May. But it was still a solid gain, reflecting the resilience of America’s consumer-driven economy, which is slowly but steadily growing.
Friday’s report from the Ministry of Labor also revealed that the unemployment rate increased from 4% to 4.1%. And the department sharply revised its estimate of job growth for April and May to 111,000.
The state of the economy is weighing heavily on the minds of voters as the presidential campaign heats up. Despite steady employment, few layoffs and slowly cooling inflation, many Americans are still angry about inflation and blame President Joe Biden.
Economists have repeatedly predicted that the job market would lose momentum in the face of higher interest rates set by the Fed, only to see hiring gains show unexpected strength. Still, there are signs of a recession in light of the Federal Reserve’s series of interest rate hikes. US gross domestic product – the total value of goods and services – grew at a deadly annual pace of 1.4% from January to March, the slowest quarterly pace in nearly two years.
Consumer spending, which accounts for about 70% of all US economic activity and has powered growth over the past three years, rose at a 1.5% pace last quarter after growing more than 3% in each of the previous two quarters. In addition, the number of advertised job vacancies has steadily declined since reaching a record high of 12.2 million in March 2022.
However, although employers may not be aggressively hiring after struggling to fill jobs in the past two years, many are not cutting, either. Most workers enjoy an extraordinary level of job security.
In 2022 and 2023, the Fed raised its interest rate 11 times to try to beat the worst inflation in four decades, raising its key rate to its highest level in 23 years. The punishingly high lending rates that resulted, for consumers and businesses, were widely expected to trigger a recession. They didn’t. The economy and the job market have instead shown remarkable resilience.
Meanwhile, inflation has fallen slightly from a peak of 9.1% in 2022 to 3.3%. In remarks this week at a conference in Portugal, Fed Chairman Jerome Powell noted that inflation in the United States is slowing again after high readings earlier this year. But, he warned, more evidence that inflation is moving toward the Fed’s 2% target will be needed before policymakers cut rates.
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