RALEIGH – That collective sigh of relief you may have uttered Friday morning when news broke that jobs growth slowed in June is also what the Federal Reserve wanted to hear. And two Triangle economists agree.

Projections of a big increase in jobs on Thursday triggered a Wall Street selloff and reignited expectations the Federal might resort to more interest rate hikes to fight ongoing inflation.

In fact, the US added 209,000 jobs, according to the Bureau of Labor Statistics. That was under expectations from economists’ projections of 225,000 – and way below the near 500,000 new jobs reported the day before. In fact, as CNN notes, the new jobs number is the lowest monthly gain since December 2020. Payroll processor ADP on Thursday said its survey showed employers added 497,000 jobs in June, nearly twice as many as analysts were expecting.

But this latest evidence of economic strength makes it likely that the Fed will resume its interest rate hikes later this month after having ended a streak of 10 rate increases intended to slow inflation.

“Slower job growth is exactly what the Federal Reserve wants,” N.C. State economist Dr. Mike Walden tells WRAL TechWire.

“The question now is how will the report impact the next Fed interest rate decision?  Will today’s report be enough for the Fed to keep interest rates on pause.  Or, will the Fed still see the economy as too hot, resulting in another quarter point rate hike.  Right now, I’m thinking the Fed will do another hike.  But we’ll get more insight when the next inflation report is released.”

That data is due out July 12.

Meredith College economist Dr. Anne York points to specific sector data that indicates the Fed’s impact in its interest rate hikes.

“One noteworthy data point is the employment change by industry. For June, the main decreases in employment were in wholesale trade, retail trade, and transportation and warehousing,” York tells TechWire. “This could be an indication that the Federal Reserve’s interest rate hikes are now slowing down consumer spending and that will help slow down inflationary pressures.”

Still heading for recession?

But inflation remains a problem, possibly triggering a recession, which UNC Economist Dr. Gerald Cohen has been warning about. He reiterated his prediction in a briefing from UNC’s Kenan Institute.

“I’ve been predicting a recession in the second half of the year, late 2023, early 2024. To me this data is suggestive of some slowing, but the data has been hot enough that, you keep, kind of, pushing out,” Cohen says.

According to Cohen, the strong job numbers are a good sign—but he still predicts a recession.

“In my opinion, we’re still on the path for that,” says Cohen. “But, you know, if we continue to get 200,000 jobs, I’ll keep pushing it out.”

Walden points out that even the lower-than-expected new jobs number shows continuing expansion.

“The labor market continues to expand.  Both surveys – business and household – showed gains,” explains.

“However the larger business survey came in under expectations, perhaps a sign of moderating job growth.”

The unemployment rate ticked down to 3.6% from 3.7% the month before, according to the report.

US employers have now added jobs for 30 consecutive months.

Employers added a better-than-expected 339,000 jobs in May, surprising economists and painting a mostly encouraging picture of the labor market, even though the unemployment rose to a still-healthy 3.7%. Fed officials have said that the unemployment rate needs to rise well past 4% to bring inflation down.

(CNN and The Associated Press contributed to this report.)