Triangle economists explain what Friday’s jobs report says about a possible recession
Some Triangle residents believe the US economy is already in recession despite economists saying otherwise.
Garner buyer Paul Bischler cited several reasons why he believes in the former.
“According to the prices I see at the grocery store, gas prices [and] mortgage rates now,” Bischler said. “They’re affecting me, both gas and food, as you can see, and two negative quarters of negative growth.”
The Bureau of Labor Statistics released the latest employment and hiring data on Friday, finding that in July the US economy added 528,000 jobs.
Inflation is at its highest level in over 40 years. Additionally, the economy has contracted for two consecutive quarters, which is the common – but informal – definition of a recession. It does not take into account several other factors taken into account by economists, such as the image of employment.
University of North Carolina at Chapel Hill Kenan-Flagler chief economist Gerald Cohen said two negative quarters weren’t enough to offset the latest jobs report.
“I don’t think it’s going to be called a recession, and I don’t believe it’s going to be a recession,” Cohen said. “This suggests that the economy is growing again in [the third quarter].”
Cohen said the labor market has now passed its pre-pandemic peak and unemployment has fallen to pre-pandemic lows.
“Not only have we seen [a] healthy job count of 528,000, but prior months were revised upwards again,” Cohen said. “If we went into a recession, if the economy slowed down, you would see the revision data to be down.”
Garner’s buyer, Brooklyn Blake, agreed with Cohen on job creation.
“I mean, if you walk around, there are ‘help wanted’ signs everywhere, so I believe on the jobs front,” Blake said.
UNC economist: ‘I find no signs of weakness’ in economy based on jobs report
WRAL News asked North Carolina State University economist Mike Walden, if we’re not in a recession, why do we keep talking about it?
“Obviously everything is getting politicized now, and of course the administration wants to say we’re not in a recession,” Walden said. “And, I would actually agree with them right now.
“Opponents of the administration want to say, ‘Well, we have this, this rule of thumb, two consecutive quarters of negative GDP, so we’re in a recession. And so, that’s the political angle.
Unemployment fell to 3.5%, matching the more than 50-year low reached just before the pandemic took hold.
On Friday afternoon, President Joe Biden noted, “There are more working people in America than at any time in American history.
Biden attributed the job growth to his policies, although he acknowledged the pain inflicted by inflation. He pointed to adding 642,000 manufacturing jobs to his watch.
“Instead of workers begging employers for work, we see employers bidding American workers,” Biden said.
Walden thinks inflation pushes some people back into the job market, which could help ease the labor shortage.
“The only downside is that I think it gives the Federal Reserve more ammunition to raise interest rates,” Walden said.
At the end of July, the Federal Reserve raised its key rate to a range of 2.25% to 2.5%, its highest level since 2018.
Walden said he thinks inflation has probably already peaked and should already ease a bit.