July 12, 2022
Recession. Inflation. Stagflation. All of these words and more were on the line as we saw the jobs report last Friday. Reported a little later this month because of the July 4th holiday, the anticipation built over the past few weeks. So, how did it turn out? The addition of almost 400,000 jobs was seen as evidence of continued strength in the economy at a time in which recession warnings abound.
As we have said before, it is hard to have a recession with the economy producing hundreds of thousands of jobs per month. The headline unemployment rate number was not seen as important as the rate of wage growth. The unemployment rate remained at a low 3.6% as expected, and wages grew 0.3% month-over-month and 5.1% year over year. Overall, the report was seen as positive and provided some evidence that, while inflation is still a major factor, it is not continuing to accelerate.
Focus will now turn to the next “big” event, as tomorrow we will see the release of the Consumer Price Index (CPI). Today, the inflation report is a major event and the Producer Price Index, also known as wholesale inflation, will be released the very next day. These reports will give the Federal Reserve a lot to think about when they meet to raise rates in two weeks. The question is – how far will they go? The fear of a recession will be less of a factor, at least for now.
Source: Origination Pro