CHAPEL HILL – The chief economist at the Kenan Institute called the latest data on the U.S. employment situation a “humdinger of a report,” adding that another month of better-than-expected job growth in the U.S. economy may mean that the Federal Reserve could again raise interest rates.

“Can’t find any signs of weakness,” said Dr. Gerald Cohen on Friday morning.  “This report suggests that the third quarter is off to a healthy start.”

Here’s what’s happening: the Bureau of Labor Statistics released the latest data on employment and hiring, finding that in July, the U.S. economy added 528,000 jobs.

“It’s a big surprise, a positive surprise, in the sense that almost double what most economists were thinking came in terms of additional jobs,” said Mike Walden, economist for North Carolina State University.

Not only that, said Cohen, the prior month’s jobs numbers were revised upwards.

Taken together, there were about 300,000 more jobs in the U.S. economy than what the “consensus expectations” from labor economists had been, said Cohen.

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Above pre-pandemic employment

The latest data now places the U.S. economy ahead of the level of employment observed in February 2020, Cohen said.

Not only that, the broadest measure of employment shows that the country is currently at record low unemployment, since the data set began to track that indicator in 1994.

To start the year, said Cohen, “we’ve been seeing this dichotomy between strong hiring and weak GDP growth.”

On the one hand, the measures of GDP show that the economy slowed in the first quarter and again in the second quarter.

But on the other hand, the labor market continues to bring workers into the nation’s economy, despite layoffs in North Carolina and across the country, including at well-known and not-so-well-known technology companies.

“We actually saw an acceleration in job growth,” said Cohen. 

The only downside is that this latest report now gives fuel for the Federal Reserve to raise interest rates — again, Walden said.

“This puts the 75 basis or three-quarters back on the table,” Cohen said. 

Cohen noted that a strong June 2022 jobs report may result in increasing interest rates during a briefing last month, and the Federal Reserve did later vote to increase interest rates by 75-basis points for the second month in a row.

Does this mean inflation will continue? Well, not necessarily. Walden said that already there has already been a decline in the price of commodities over the past month.

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What this means for the Triangle labor market

“There are substantial differences,” said Cohen.  “The country is not a monolithic economy.”

Some areas, even in a recession, experience growth, just as some areas, even in a period of economic expansion, see slowing growth.

In this instance, North Carolina’s economy remains strong, said Cohen, even as some other areas of the country may be experiencing economic pain or slowing economies.

“There are areas that are experiencing weaknesses, and even in recessions, you can have areas of strength,” said Cohen.

“The Triangle area is one where there has been a lot of job creation, and people are moving to the area. Even if we were in a recession, and I believe that is not the case, this data suggests that the Triangle’s economy will remain supercharged.”

Triangle employers continue to post job openings, even if the total number of openings have slowed, and there are tens of thousands of available jobs in the state, including at IBM and Red Hat, a senior executive said on Friday.

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“This report suggests, that overall, on the national level, that workers are still in the driver’s seat,” said Cohen.  That’s because workers may be able to negotiate higher salaries, better compensation, or flexible work environments, or as in the Triangle’s labor market, go find an employer who would offer them better salary, compensation, and benefits.

It’s not just large organizations adding workers, there are jobs available at many small businesses, including labor shortages still in areas of hospitality and leisure services, Cohen noted as an example.

And even in North Carolina’s more rural areas, there are signs that small business formations are rising, as the North Carolina Secretary of State’s Office recently reported that through the first two quarters of the year, the pace of new business formations in the state remained strong.

“This data suggests that we may see a growth in small business employment,” said Cohen, of the latest data from the Bureau of Labor Statistics.

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