Recession Mongers Shocked & Horrified by this Surge in Employment

They’re praying for a recession to “force” the Fed to pivot. But it’s tough to have an official recession with employment growing, wages surging.

By Wolf Richter for WOLF STREET.

It wasn’t the hottest growth in jobs ever, but it was big and exceeded the pre-pandemic average job growth. Employers added 528,000 workers to their payrolls in July, and 2.79 million over the past three months. Wages jumped, but less than raging inflation, and the number of unemployed people actively looking for work fell to the lowest since the year 2000, at the verge of the dotcom bust.

It was a shock-and-awe disappointment for the recession mongers out there that want a recession more than anything because, according to their thinking, it would “force” the Fed to pivot and start cutting rates – despite what the Fed actually says – and end this horrifying QT in a market that is addicted to QE and will suffocate under QT. They want the Fed to reverse the tightening though it has barely started (way too late), so that stocks can continue to get inflated to the moon.

Someday we’re going to get a recession – eventually there always is one. Knuckling under this raging inflation will likely require a recession, yet a shallow recession might not be enough to get the job done as this inflation is getting more and more entrenched.

But it’s just very tough to have an official recession with this type of labor market, with employment growing and wages growing sharply, and with unemployment falling.

The National Bureau of Economic Research (NBER) calls out recessions in the US, and the NBER’s definition has been the same for decades, and it hasn’t changed, and its definition includes labor market metrics, some of which we got today.

This strength in payrolls is supported by other data, such as the still historically high number of job openings that employers reported for June, along with massive churn and job hopping among very confident workers that are going for better-paying jobs, and amid aggressive hiring by employers to fill their jobs.

OK, cash-incinerating startups are now worried about running out of cash to incinerate, as obtaining new fuel to incinerate has become more difficult, and they’re trying to cut their cash-burn rates by reducing their payroll. Among them are Robinhood and other former high-flyers, some of which have become heroes in my Imploded Stocks column, that have lost oodles of money during their existence. But that’s a small – and very crazy – corner of the labor market, and the layoff numbers are minuscule compared to the overall labor market.

Overall, layoffs and discharges in June and in the prior months were at historic lows. And there are still large-scale staff shortages in the healthcare system, school systems, airlines, and many other industries.

So the total number of workers on nonfarm payrolls rose by 528,000 in July to 152.54 million workers, a new record, finally and for the first time beating the pre-pandemic high, according to the Bureau of Labor Statistics’ survey of establishments today. And this number of workers on payrolls continues to catch up with the pre-pandemic trend (green line):

Workers, including self-employed and entrepreneurs.

Households reported that the number of people with jobs, including the self-employed and entrepreneurs that are not captured in the employer data above, rose by 179,000 in July, and by 185,000 over the past three months to 158.3 million.

It is interesting that the number of people on the payrolls of employers is rising sharply, while households are reporting a much smaller increase in the number of working people, which include the self-employed and entrepreneurs. This could be in part due to self-employed people returning to regular employment with a company, to where employers are reporting the gain, but for households, the person just shifted from self-employed to being on a company’s payroll. And that would make sense amid the aggressive hiring by employers.

The number of unemployed people lowest since dotcom.

The number of unemployed people who are actively looking for work fell by 242,000 to 5.67 million, edging below the pre-pandemic low, and marking the lowest level since the year 2000.

The labor force is stuck.

The labor force – the people who are working or are actively looking for work – dipped by 63,000 in July, the second month in a row of declines, to 163.9 million, essentially where it had been in February.

There has been a lot of thinking about why the labor force has gotten stuck. All kinds of logical reasons are being cited that work together: The difficulty and expense in finding daycare; the need to care for elderly relatives; the excess mortality since 2020; health problems associated with covid; a massive wave of “retirements” by people who have enough already thanks to the massive inflation of asset prices; and as I phrased it, ageism, where older people who want to work stop looking for work because they cannot get anyone in their industry to take them seriously (particularly in tech), and when they stop looking for work, they come out of the labor force. And the list of reasons goes on.

Many folks, including the Fed, are now suggesting that the old normal labor force may never return, that there were permanent changes in the labor market that we’re just now trying to figure out.

Wages of non-managers surged, but still outrun by raging inflation.

Average hourly earnings of non-management workers – coders, waiters, teachers, police officers, engineers, construction workers, etc. – jumped by 0.4% in July from June, and by 6.2% from a year ago to $27.45 per hour. This was the 10th year-over-year increase of over 6% in a row.

These year-over-year increases of over 6% – beyond the distortions in 2020 – were the biggest since early 1982. But they were still outrun by raging inflation, with CPI inflation at over 9%.

The Employment Population ratio, which tracks the percentage of people in the working-age population who are working, ticked up to 60% and has been roughly in the same range since March, but a full percentage point below the pre-pandemic range of 61%, which parallels the labor force getting stuck.

The unemployment rate, at its narrowest definition – the percentage of people who are in the labor force, but are not working – edged down to 3.5%, where it had been before the pandemic. If the labor market weakens, this rate will spike, as it has done every time before. But it remains grounded.

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  165 comments for “Recession Mongers Shocked & Horrified by this Surge in Employment

  1. Harry Houndstooth says:

    Fellow Wolf Richter Fans-

    The wisdom in these articles at this time is astounding. Just when you are fascinated with the insight and logic with relevant researched data, along comes another article even better.

    • phleep says:

      This morning I was scratching my head, asking what the heck is going on? And here is a really coherent take, on just that. It is an antidote to the professional noise-mongers.

    • phillip jeffreys says:

      The numbers are interesting. We could spend cycles arguing employment data versus GDP signals. But, to be honest, aside from the good news that people are taking jobs, I’m not focused on this – don’t really care much to be blunt. Similarly, I don’t really care about the arcane aspects of markets being asset bubbles that are fundamentally being manipulated by the FR, large hedge funds, big banks commodity options chicanery, corrupt gov’t/really really big biz machinations, etc., etc. If it’s known, then one can jump in or out to play that game at chosen risk levels (was the game ever honest?). I don’t really care about QT versus QE – though I fully agree with Wolf’s numerous jibes vis live by the QE addiction/die by the QE addiction (one day) as well as his hypothetical point that yields will eventually become a firewall.

      The obvious challenge at the moment is figuring out ground truth…what is actually the state of the economy (US and global) and what is trendline?

      Wolf repeatedly, throughout multiple articles, underlines “raging” inflation. We all know the avowed gov’t position once it passed through the denial phase (or deliberate lie) of “transitory”: the usual Keynesian demand side suppression of consumption with a dash of interest rate induced investment discouragement.
      – this is a blunt instrument
      – it has limited impact on supply side inflation drivers, specifically energy policies
      – it has limited impacts on unpredictable/predictable effects of sanctions
      – it has limited impacts on energy policies undercutting fertilizer and other agricultural cost vectors
      – it has limited impacts on the significant shipping/transport realignments that are symptomatic of the larger global economic partitioning underway
      – it has little impact on the positioning of BRICS+ to undercut the dollar as reserve currency
      – it has little impact on the MIC/gov’t incessant push for wars
      – it has questionable staying power (we shall see) when the gov’t is currently planning further trillion dollar expenditures (much of which is not production oriented)
      – it has a a shrinking toolkit in a deteriorating international environment over which American influence (military, diplomatic, economic) is clearly waning

      Yes, anecdotal thoughts not a technical argument. But the conclusion I am led to is we are not going to solve raging inflation any time soon. The politics, despite public pronouncements, do not line up. Something, somewhere in the system is gonna have to give – big time.

      • eg says:

        This is also what I am seeing, phillip jeffreys — but the Fed must do something, and mostly what it can do is raise rates, so I expect the tightening cycle to continue.

      • Squirrel says:

        You are spot on! We are dancing around the edges while the middle is shifting in a massive way.

    • Richard Greene says:

      Thank you Mrs. Richter

    • james says:

      According to your charts, job numbers are still lower than pre-pandemic highs. The establishment numbers look promising because they don’t account for multiple job holders. The unemployment rate has remained low because the work force size has collapsed along with the collapse in jobs. A lot of people are simply not working or not counted, our trade deficit is crossing $1.5 trillion, real GDP measured by real/not CPI inflation is severely negative, government debt to GDP is over 100%, real/not CPI inflation is crossing 20%. Maybe it’s not a “recession”…….it is something WORSE.

  2. Doug says:

    Wow, maybe J. Powell actually knows what he’s doing, without falling victim to the relentless crowing of all the debt hawks of the world.

    • Staunton16 says:

      J.Powell showed up on the doorstep of a raging party and politely asked the host to turn down the music. The party-goers responded by turning the music UP. I don’t think that’s what J-Pow wanted…

      The market is fighting the FED and as long as real rates are negative with multiple trillions in the overnight reverse repo, inflation will rage. Inflation is a nation/economy killer, and the “debt hawks” are rightly concerned.

    • historicus says:

      Knows what he’s doing….if he knows he is so far behind the reality of the situation maybe.
      He said, after he pumped the M2 40% in two years, that we must “unlearn” the importance of the M2 metric…..that was a couple of months before inflation exploded.
      He called rates “neutral” in 2018 when inflation was 2% and Fed Funds were 2%.
      Then he called rates “neutral” recently when inflation was 9% and Fed Funds 2.25%.
      He is wobbly, IMO.

  3. Eastern Bunny says:

    Fed will use any excuse to keep the rates negative and they will have plenty or will make some.
    The markets understand that jawboning is no substitute for actual policy and they will be proven right.
    This is the most criminal fed ever, illegally confiscating and devaluing the labor and savings of the american worker.
    The trillions printed into existence aren’t going to be retired.
    Even if inflation slows down, the price level is here to stay.
    It will only increase more slowly from here if we get lucky.
    The robbery has already taken place.
    What you will see is the allocation of losses eventually to the uninitiated.

    • JG says:


    • historicus says:

      “This is the most criminal fed ever, illegally confiscating and devaluing the labor and savings of the american worker.” AMEN!

      Life’s wages saved, taxed paid, then a rip roaring inflation with rates near zero…..

      Inflation is a thief. Thus anyone who promotes ANY (2%) inflation is a thief as well.

      This ridiculous 2% target, now called a “mandate”, is self authored and diametrically in conflict with the “stable prices” mandate…yet they slipped it into the acceptable media narrative. I object. And even with an “unforeseen” 9% spike, they keep the goal of 2%. Thus these prices, plus 2,4,6% next year will be called a Fed victory. The Fed should be pushing for price rollbacks to get back on their questionable 2% annual trajectory. They arent, and that speaks volumes.

  4. Old school says:

    Did Powell say he wants inflation to average 2%? If so we are going to have to be under 2% til I’m dead to average 2%.

    • 2banana says:

      That’s not how Jpow describes it.

      Inflation is “transitory” as in prices will never go back to what they were but will slow going up in the future.


      You basically just ignore what came before you declared the transitory inflection point.

      They teach this in Harvard?

  5. 2banana says:


    Good news = bad news (for stock hedgies) as the Fed can keep raising in big chunks.

    “Employers added 528,000 workers to their payrolls in July, and 2.79 million over the past three months.”

    • Richard Greene says:

      The actual count was a loss of -385,000 jobs in July 2022 compared with a loss of -41,000 jobs in July 2021.

      July 2022 was much worse than July 2021 before adjustments.

      (Payroll survey raw data)

      • Franz Beckenbauer says:

        It’s like this scene in “The big short” where Michael Burry explains to his main investor he found the rat in the housing market by Reading the MBS prospectuses.

        “You *READ* them ????? Nobody *READS* them !”

        A true classic if there ever was one.

      • Stonedwino says:

        That’s before ‘the adjustments’…what a fraud. Did anyone actually dig into the employment numbers?!

        -71k full time
        394k part time
        92k 2nd jobs

        The jobs report was horrendous. I have no idea what everyone is smoking…

        • Wolf Richter says:


          Employment is HUGELY seasonal EVERY summer. Duh. And it’s the same, every summer, with a huge hiring boom in May and June, followed by a decline in July. After the summer, those seasonal jobs — many students have them — disappear. Didn’t you ever have a summer job? Duh.

          So if you don’t seasonally adjust the data, you cannot compare July to June. With seasonally unadjusted data, you can only compare July 2022 to July 2021.

          So not seasonally adjusted: payrolls spiked by 771,000 in May and by 906,000 in June, before declining by 385,000 in July. So why didn’t you clueless people come around and rave about the huge gains in not-seasonally adjusted jobs in May and June??? You people are really a handful!

  6. Jim Cramer Fan says:

    It looks like the Fed will actually pull off a soft landing. Powell has done a heck of a job.

    • 2banana says:

      Well, if you define a “soft landing” as stagflation for a decade…

      Who doesn’t want that?

      • Apple says:

        Stagflation occurs with high inflation, low economic activity and a high unemployment rate. Look at Wolf’s graph, the unemployment rate is 3.5%, the lowest since 2000.

        This is not stagflation despite what Zero Hedge says.

      • The Real Tony says:

        Stagflation will turn to runaway inflection when the U.S. dollar rolls over.

    • Wolf Richter says:

      Right now they’re not pulling off any kind of landing. That’s what it looks like to me. They will have to go a lot further to get her to land. Whatever kind of landing.

      • phillip jeffreys says:

        That’s what I was looking for – rather than getting schwacked by you! Agree totally.

        Giving the Fed some leeway (they can’t control the “exogenous”) – they are only one actor in this power drama being played out at the highest levels globally.

        • sunny129 says:

          phillip jeffreys

          ‘the only one actor………”

          Since you have elaborated(above) the limitation of Fed over the drivers of supply, the only thing they can afford to curb the demand for credit,’ meaningfully’ but NOT with baby steps re rate increase and QT at snail pace.
          Fed is deathly afraid of the mkt tantrum. When the inflation rate persist around 8% or more, their jawboning has lost it’s aroma.

      • Swamp Creature says:

        The only landing that will be successful in the long run is 18% mortgage rates and 21% prime rate. That will clean out all the mal-investment since 2008 and allow true price discovery of all assets.

      • RickV says:

        “They will have to go a lot further to get her to land. Whatever kind of landing.”
        Right on.
        With trillions in QT ahead of us and the Fed only taking the balance sheet down $90 billion a month it will take years.
        Also, CPI monthly comparisons for the next three months: July, Aug, Sept, 2021 are .5, .3, .4 respectively, which strongly suggests annual inflation will stay at least 9% for those three months.

      • Depth Charge says:

        Exactly, Wolf. In fact, there’s even more air beneath her wings and she seems to be gaining altitude. The FED blew it by not hiking 1% last meeting. I’m sure we’ll hear down the road “we should have hiked faster.” Why is it these guys are always full of excuses about what they should have done, but never actually aggressively doing it?

      • Asul says:

        Right now they are throwing ducks into the engines of the plane … then the plane will stall … then the passengers will panic … and then …

        • Harvey Mushman says:

          They are thousands of miles from any runway…. The plane has lost power and all the NAV equipment stopped working…. There are no visual references that can be seen….

        • Harvey Mushman says:

          No soft landing for you!!!

    • Flea says:

      This is all orchestrated foe mid term elections then shtf

      • Apple says:

        Yes, people are taking jobs, planning on quitting them on November 3.

        • jao says:

          You sound like the type of person that believes the only way to lose a job is to quit.

          In the more distant past, sometimes you didn’t quit the job- the job quit You!

    • Swamp Creature says:

      Jim Cramer Fan

      Yep, Jim Cramer said those exact words.

    • historicus says:

      Now I understand the “Jim Cramer” thinking.

      A record disparity between Fed Funds and Inflation…….

      Hayek said “When central planners decide, they intentionally aid one group at the expense of another.” This is a reverse Robinhood Fed.

  7. Steve says:

    Mostly working people getting second and third jobs needed to cover inflation. Jobs Report not even close to the real picture. These are not so much the good paying full time jobs. For those it’s Layoffs. And downsizing. All over tech and everywhere even Walmart. Administration trying to manipulate survival for the midterms. This is my read.

    • 2banana says:

      Did you read the article?

      Cause Wolf is gonna ask.

      • Steve says:

        I read the article. I also read the take on the Hedge looking deeper into the stats. I also see whats happening on the ground. The job stats displayed are not showing whats really happening. The stats are maniupulated. How do you have a flat employment population ratio since March if more people are working? You can’t. It must be the same working people taking on more jobs which I stated. I also know many many people who retired from the pandemic and young people cant replace them. There is a shortage of everything and everybody from this. But we are still way down. The fake housing wealth is still causing a fake wealth effect but that fakeness is now vanishing at light speed. Keep your eyes on the companies reporting on layoffs as the housing bust grinds down. Watch GDP. And what does escalating debt mean? People needing more debt to survive. This manipulated job report is a scam. You can’t have accurate economic reports when you mix in the top 20% with the bottom 80% having a far different story. Is the economy run more by the top 20% rich or the bottom 80% blue collar class dying from inflation? Wolf reports the best most accurate stats around, but the stats don’t jive with reality.

        • Trailer Trash says:

          We are looking at the K-shaped economy that was predicted a while back. The official statistics are showing us the upward leg. The tents lined up on sidewalks are showing us the downward leg.

          What’s different this time is many homeless people have jobs but can not afford outrageous housing costs.

        • Jon says:

          I agree with you. Wolf wants to play the whole there is no recession nonsense like the Biden administration plays. He takes all these figures like there is no agenda.

        • Wolf Richter says:


          Yes, everything is fake, the jobs are fake, the numbers are fake, the people are fake, the reports are fake, the companies are fake, the tourists are fake, the money is fake, the debt is fake…

          People have been spouting off this BS month after month after every jobs report — including Mish — for years, and this BS gets really old after a while.

        • sunny129 says:


          “economy run more by the top 20% rich..”

          Infact out of 70% consumer spending affecting the economy, nearly 35% of that seventy percent is by the top 20%. These are the ones with over 90+% of Wall St wealth, just like in a developing country or a banana republic

    • Paul from NC says:

      This is the correct take. I don’t know where these statisticians live or work, but it ain’t where I live and work (apparently).

      >This was the 10th year-over-year increase of over 6% in a row.

      I don’t know anyone in coding or engineering that has had a decade of pay increases. Most of my company (60K employees, tech) has not had a pay increase in the last 4 years with the exception of my business segment. For sure *nobody* coding or engineering at my company has gotten a 6% increase in the last decade, unless of course you played games with management and threatened to quit at an opportune time. Things are bad in tech. Everybody’s laying off, always (though this is nothing new for this industry). When Google Cloud and AWS lay people off, you know shit’s about to hit the fan. As for my company, we’re constantly laying off and hiring off-shore, so, nothing new under the sun there either. We welcome every new hire in engineering with an email of introduction. It’s probably been a year since I’ve seen an American name introduced.

      • GrassRanger says:

        Paul, the “10th year-over-year increase of over 6% in a row” is 10 months of monthly 6% increases over the preceding year, not 10 years of unending 6% wage growth.

      • BradK says:

        I’m in tech and I concur absolutely. H-1B visas and outright offshoring have gutted any competitiveness for U.S. resources.

        Of course you get what you pay for.

    • Wolf for Fed Chair says:

      I work what probably would have been 2.5 jobs prior to the WFH trend.

  8. Like inflation the Fed should overshoot on employment, these workers just had a lost decade (or two) allow these wage gains to become embedded before you pull the rug.

    • Clete says:

      @AB: This is a really interesting point. Yes, asset values have spiked and put homes out of reach, but wages have (finally!) started to match cost of living increases.

  9. DR DOOM says:

    The market ate Powell’s .75% rate hike in July like a snack.

    • doug says:

      Eating too fast can cause some distress later.

    • Mendocino Coast says:

      As Per Powell’s Increase 0.75 %
      My Bank is not responding with an increase in saving rates and holding the money in house as I see it !

      The Latest Ploy is that ” just before ” an expected Rate increase they come forward with a Tiny Rate increase then say we already raised rates ? . I have seen several Bank’s/Credit unions do such

      The World has learned from Powell’s Tenure at the Fed :
      You can do as you want and no one is going to stop you

      So Who is the Bag Holder ? look in the Mirror

    • Depth Charge says:

      “The market ate Powell’s .75% rate hike in July like a snack.”

      Exactly. Mortgage rates have been falling. The FED’s actions are having zero effect at the moment.

  10. patrick says:

    more anecdotal evidence of an economy on steroids – went to my favorite watering hole – there is gentleman there who owns 4 restaurants here – all very popular – all excellent – 2 james beard award winners – his flagship restaurant has not yet reopened since covid – and he received a $5 million dollar grant from the city to pay for a re-model – so with that as the background I asked him ” why haven’t you re-opened ” and the answer – ” I can’t get it staffed” this restaurant had a average check of $150 -200 per person before covid – so $5,000,000 in free tax payer dollars spent restaurant scene booming here can’t get staffed! no recession!

    • Apple says:

      Supply v Demand – how does it work??

    • phoenix says:

      why the hell is the city giving out million dollar grants to restaurants?! what a joke

      • Shiloh1 says:

        I listen to the Stocks&Jocks Podcast out of Chicago M-F. The Chief, a lifelong Chicagoan and stocks/options trader, has been mentioning these examples for over a year. The helicopter money landed by the truckload on some people.

        • Wolf Richter says:

          The Chief had me on his show a few times in the past. It’s tough for me because it’s morning drive time in Chicago, and it’s like 4 am in San Francisco, and I have to get up two hours earlier to wake up and get my brain to function. But it was fun.

      • Shiloh1 says:

        I listen to the Stocks&Jocks Podcast out of Chicago M-F. The Chief, a lifelong Chicagoan and stocks/options trader, has been mentioning these examples for over a year. The helicopter money landed by the truckload on some people.

    • Clete says:

      @Patrick: With all due respect to the guy who owns 4 award-winning restaurants, why the hell should a city grant him 5MM for renovations? This sounds grafty at best, unless he can produce receipts showing exactly how the money was spent. Methinks a sizable portion of the 5MM may have roundtripped back to somebody’s home.

    • Depth Charge says:

      This economy is so overheated it’s sickening.

  11. gringogreg says:

    Interest rates moving slowly walking higher. Inflation moving slowly lower! profits are moving higher for most companies. Weak hands have been purged so buy the BTFD! 10s of millions will be, and have been thrown under the banana-republic inflation bus but the upper middle class and the 1% will be just fine! That’s how things roll in America! Afterall anyone who bought a house in the past 12 years, other than say the last year, is up large $$$–some up over 1000% like me!

    • The Real Tony says:

      Profits can only move lower when inflation outpaces wages by ten percent a year. Simple mathematics and dime store logic.

  12. gringogreg says:

    The participation rate is low due to all the 10s of millions doing fulltime drug trafficking, prostitution and thefts of all kinds. GDP would be much higher if all the illicit criminal activities are counted. Sheet, slinging drugs is in multi-100 of billions $$$ industry!
    Was inflation for Mexican drugs during the covid border lockdowns but now pricing is below pre-covid numbers!

    • Apple says:

      You watch waaaay to much tv.

      • gringogreg says:

        According to the latest data available, the FBI quoted 33,000 gangs and 1.4 million gang members active in the US.
        And there is 10s of millions of hookers and drug slingers and other criminals who aren’t in a gang!
        America is a corrupt crime ridden nation!

        • 728huey says:

          Are you counting all of the pharmaceutical company representatives and women working on OnlyFans as drug dealers and prostitutes?

  13. Some Guy says:

    Probably the bigger impact on this one is not in the U.S., but in the rest of the world. This report means QT and rate increases continue and the global US dollar shortage will worsen.

    Is there an ETF that generates a return based on the number of countries the IMF is involved in? – I’d be bullish on that one.

    When the oil market gets tight, something, someone, somewhere has to give.

    In 2008, the U.S., with its messed up housing market, was the biggest place to ‘give’ – suffering a strong downturn that reduced oil demand to help bring the market back into balance.

    It seems like it will be someone else’s turn this time around, although still a bit of a guessing game who takes the biggest hit.

    Lots of developing countries in trouble, but their demand for oil may not be enough to rebalance the market. Europe looks shaky, obviously, and the housing market bubble countries (Can, Aus, NZ, Scandinavia, etc.) also are likely to suffer more this time around as well. China is the biggest country with the biggest housing bubble, plus horrific (from an economic perspective) demographics, so a slowdown there seems plausible too.

    Combined with oil supply increasing in response to higher prices, this should be enough to get the market back into balance and inflation will subside, and the U.S. will skate through relatively unscathed this time around, barring a civil war after the next presidential election of course…

  14. R2D2 says:

    Jobs rising, wages rising, GDP rising, S&P rising, inflation now falling, Fed rates could be cut as early as Nov…

    Sounds like the US has pulled off a “goldilocks” recovery for the second half of 2022…

    • Einhal says:

      What is your basis for saying that inflation is now falling?

      • R2D2 says:

        Oil price is down 10-15% this week alone. Gas is down, wholesale food is down, shipping is down, used car prices are down, yields are down, mortgage rates are down. The signs are everywhere!

        • The Real Tony says:

          Until the U.S. dollar implodes and inflation comes raging back once the midterms are over.

        • Steve says:

          this is market reality, not stats. Market says recession is here and accelerating. All the other stats like the jobs report are nice to look at at, but mislead from reality.

        • phillip jeffreys says:

          All that will be upside down once Winter arrives.

        • Anthony says:

          ‘all that glistens is not gold’

    • COWG says:

      Not to be snarky… but perhaps go back and read this article…

      Services are displacing goods in the CPI… services count more in the CPI formula than goods by about 5 to 1, I think…

      Wolf breaks the down the differences pretty well…

      Then please come back and defend your post…


      • R2D2 says:

        That article is a good one, but it covers “lagging” inflation indicators from 2+ months ago. It is the past.

        The “leading” inflation indicators, like spot oil, right now this month, are falling, in some cases plunging.

        • COWG says:

          Yes, all true…

          However, others, like rent, food out and medical, haven’t budged…

          But remember, inflation, is a cumulative thing…

          Even a slight reduction to 8% or even a healthy drop to 6% can’t erase the damage already done…

          8% is still ripping your face off, 6% still leaves some of your face intact… :)

        • Harrold says:

          WTI is down to $88.50. Gasoline $2.86.

          Prices are finally coming down.

        • Steve says:

          keep your eyes on these major housing signs: for sale – for rent – for lease…all increasing, rapidly.

        • Wolf Richter says:

          CPI will come out next week. We’ll see. The biggest part of where consumers are spending their money on is services. That’s where it’s at. If services CPI keeps spiking, like it has been, that would be a huge problem because it’s a lot harder to deal with than the volatile commodities components.

      • SocalJohn says:

        R2D2, I hope you share your kool aid.

  15. Swamp Creature says:

    What is missing in this jobs report is the number of people working “Off the books”. I’m one of them. Working 10 hours/day in the Swamp driving Ms Swamp on her cases and helping with all the back office computer work. I work for free essentially, and am not counted as being employed. If anyone called to ask me my employment status I would hang up them so fast their head would spin.

    Over the weekend we had Ms Swamps hair done by her hairdresser at her home. No overhead, no rent to pay. All transactions in cash. I don’t know what she reports, probably nothing.

    I could go on, but with Biden hiring 80,000 IRS agents I think I’d better stop here.

    • Goodlooking says:

      I think that is 80 billion increase in the IRS budget but in an undeclared time frame….

  16. dishonest says:

    My good pal Jerome is having kittens trying to figure out how to justify rate increases to his keepers. Faking the jobs data provides an almost plausible excuse.

    • Mendocino Coast says:

      RE : justify rate increases
      that’s Easy ? just look at savings rates to start a huge list

  17. Brant Lee says:

    The best thing any country can have is high employment numbers. It’s a dam wonder too after the years of off-shoring and manufacturing moving out of the country.

    Now the same people, giant stock investors, banks, and most corporations, who have ransacked their own country in every way possible or contributed to it, are crying for some way to return to QE and no-low interest available only to them. Even hoping for larger unemployment figures to help jump back on the free ride.

    I suppose the elite are at a loss on what to do to grow their fortunes now. Let them buy back their stock at 5% interest and see how that works out.

    • 91B20 1stCav (AUS) says:

      BrantL-can remember some years ago when the pre-Murdoch WSJ opined that a 10% unemployment rate was desirable…

      (I also recall that the unemployment rate during the Depression hovered around 20% at its height).

      “…one man’s ceiling is another man’s floor…” -p.simon

      may we all find a better day.

      • 91B20 1stCav (AUS) says:

        …of course, realistic unemployment numbers have not been extant for some decades, now…

        may we all find a better day.

  18. Gen Z says:

    Hike the rates some more!
    We need Toronto real estate to crash harder.

    • The Real Tony says:

      We also need to see savers make a lot more money in interest to help fund Revenue Canada’s social programs and handouts.

      • Gen Z says:

        Ever heard of a TFSA and RRSP?

        Tax free savings and investments. Gains in the accounts do not attract taxes.

        Let the real estate prices fall my friend. It’s for our own good as Canadians. Can’t have Russian and Chinese oligarchs profiting from real estate while the average Canadian worker is taxed to the hilt for working a dead-end job.

  19. MF says:

    In Wolf’s “American Consumers Are Tough” post, all of the spending sectors, except services, have returned to their original trend lines.

    This tells me that employment has a ways to go to catch up. Once manufacturing, durable goods and retail are finally able to staff up fully, we’ll still have to wait for services. (Anyone try to hire any services pros lately? You have to take a number.)

    My theory is that the economy flipped during/after the pandemic. Like all other areas, structural forces in the labor sector that were already exerting pressure suddenly flipped over like an iceberg once the institutional and inertial resistances were removed by a set of shocks caused by the pandemic.

    Now we have a mirror economy from the one that existed between 2008 and 2019. Capital is in recession, no doubt. Labor, however, is in a growth economy and will be for some time.

    But because capital has easy access to mass media, we didn’t hear about the labor recession that never ended after the GFC. But we do hear about the very real capital recession now. Before, there was nothing to see here; everything’s fine, move along. Now, OMG the world’s on fire. Somebody do something. Meanwhile, normal people quit their old lower paid job for a pay raise and then go shopping.

    Capital is going to have to pivot to figure out how to make strong returns in a high rate environment. Granted, that requires more work than pushing leveraged funds into an ever inflating securities market. But I have great confidence they’ll figure it out.

    • Paul from NC says:

      >Anyone try to hire any services pros lately? You have to take a number.

      As an example, and I’m not talking about highly skilled labor, but someone who knows basic telecom/network wiring: Had a storm on Tuesday, ISP and phone service has been sporadic since then. Call in the work ticket to Centurylink, and customer rep quotes me August 31st as the first date that a technician can come and check their own POP-to-street wiring. :-O Even *he* sounded surprised.

      • Texanalways says:

        So true. This is what my son-in-law does. It is not an easy job and he apprenticed for over a year before he worked alone. He is actually paid very well and has tons of job offers. A perk is any supplies left over from the job is his to keep. He resells it making an extra $500 a month for fun money.

  20. Richard Greene says:

    I’ve been following employment data since the late 1970s and this year has had some unusual numbers and comparisons, especially this month. This is not a leading indicator, so it may not matter, but consider these unusual “adjustments”:

    July 2022 versus June 2022:

    Payroll survey +528,000 new jobs

    Household survey +179,000 new jobs

    Payroll raw data (- 385,000 fewer jobs)
    (Payroll raw data in July 2021 = (-41.000 fewer jobs)

    Net birth of new businesses adjustment in July 2022
    +309,000 imagined jobs

    Net birth of new businesses adjustment in July 2022
    +264,000 imagined jobs

    Raw data July 2022 versus July 2021
    -385,000 fewer jobs versus -41,000 fewer jobs,
    or 344,000 fewer jobs in July 2022

    Net birth adjustment July 2022 versus July 2021
    +309,000 imagined jobs versus +264,000 imagined jobs,
    or 45.000 more imagined jobs in July 2022

    Net adjustments to raw Payroll Survey data created almost +400.000 more jobs in July 2022 than in July 2021.

    Color me suspicious.

    • Steve says:

      reality simply means looking between the manipulations. The statement inflation is transitory is manipulated. How can the fed think that all that printed money would not lead to this? Looking on the ground is better truth than stats. What you see is what you have. What you have is the worlds greatest housing busts, the worst inflation, working to death falling further behind, supply chains permanently wrecked by global confrontations, homeless everywhere, empty industrial buildings all over, pandemics and Govts willing to lock you down repeatedly, wars and rumors of wars, on and on. Where is the good news? Washington now resorts to fabricated realty to sustain things. Just like Russia and China do their people. Just how many people feel good about their future right now? That is serious reality. Printed numbers…not so much.

  21. Michael Engel says:

    1) In the last three months the labor force added 2.8 million workers, but the household survey disagree, it’s down.
    2) By establishments, breadth is down. No jump, no vertical rise above resistance.
    3) Fred : the Civilian Labor Force is 163.960 million, a lower high, below
    2019 high @164.603 millions and below Mar 2022 high @164.409 millions, but US population is growing, the whole world is moving in. Something is wrong.
    4) The bad news : hourly earnings are down, first slowly/then faster. Workers are too expensive, too demanding, unproductive, competing with the black market and the illegals.

  22. Clete says:

    RE: Ageism
    It’s real. I’m way too young to be out of the ‘official’ workforce, but I’ve worked too long and too hard to do sh*tty jobs for sh*tty people. In my field, marketing/sales/advertising, anyone over 40 is dead. You can take a sh*tty job making $40K, working 60-hour weeks, but why? I can do better grabbing a project here and a project there and watching the investments.

  23. jm says:

    Wolf wrote: “There has been a lot of thinking about why the labor force has gotten stuck. All kinds of logical reasons are being cited that work together: The difficulty and expense in finding daycare; the need to care for elderly relatives; the excess mortality since 2020; health problems associated with covid; a massive wave of “retirements” by people who have enough already thanks to the massive inflation of asset prices; …”

    Physicians in the practice where my daughter works are having to do the semi-skilled tasks of guiding patients to examination rooms and taking their vitals, etc.. All within the 20 minutes per patient they’re allowed to spend on preparing for the visit and doing the examination, diagnosis, and other work of the visit. The reason is the shortage of lower-level workers, for which she gives exactly the reasons quoted above.

    • Cyrus says:

      It’s hard to see that issue going away. Boomers who are recent retirees and not at median wealth or higher are going to find it difficult over the next 15 years.

      Labor is worth more than they are willing to accept, but kicking and screaming, they will still need to pay it.

  24. jm says:

    This Commerce Deparment graph tweeted by Mohamed A. El-Erian is relevant:

  25. nsa says:

    When did asset “appreciation” resulting from shrewd insightful investing morph into …..gasp…..crass tacky asset “inflation”?

  26. Nate says:

    I don’t always agree with wolf 100 percent, and boy he lets you know it when he thinks you are WRONG, but his breakdowns of the numbers and his candid perspective are great! If anything else, it’s nice to use him as a counterbalance to the herd, to question their assumptions.

    Other than above, I don’t know what to make of labor except man this economy is wild! Didn’t gdp go down? Yet wage inflation higher than ever and unemployment is tiny!

    My personal guesses are retirement/ageism (they are probably related, sometimes folks go before the ax cometh) & maybe a lack of productivity gains are influencing this number. Labor was hyper weak for a while by technology, free trade, and labor policy changes, but perhaps those have reached their peak. Everything tends to change except the human desire for moar.

    CPI feels more important this time. A lot of money wagered on inflation right now.

    • Pondering PA says:

      I think the main one is daycare costs. It will cost us almost $16,000 to have our daughter in daycare from September to May this year, and we’re feeling grateful since our other kid is finally old enough to go to public school or else we’d be paying double. And so many of my peers got disillusioned about working during Covid pay cuts and work load increases. There was that meme all my friends with babies and in some of the disillusioned Millennial parenting teacher groups were sharing: ‘I do not seek a career. I do not dream of labor.” A lot of teachers just quit these past couple years. After all, even if you do work your 40K job, the government still has a ridiculously low cap on the employer dependent care accounts at only $5000 of childcare costs being eligible as non taxed income. So it does not make much financial sense to work a job or to have kids, and definitely not in conjunction or you are probably in the red.

      Probably the best life recipe (none of which I have done) would be to just marry rich, get your spouse’s parents or befriend some random rich person to gift you the downpayment for a house, maybe have a dog instead of children, and then put whatever is remaining of the inheritance into the stock market to grow so that when you’re old you can pay a nursing aide to help.

      Sort of kidding. I actually do have a new job and am not just going to sit around. But I am not at all surprised to see a big shift in employment.

    • HowNow says:

      I like that expression, Nate: “…the human desire for moar.” The human desire for more sounds reasonable. The human desire for moar, sounds gluttonous.

  27. Max Power says:

    It will be fascinating to see how the financial markets are going to behave come Sept.-Oct. with the Fed no longer monetizing the US deficit and short term rates even higher than today. The liquidity private markets poured into risk assets will now by definition have to be directed towards the US Treasury… instead of Wall St.

    We’ll have to see if and how that arrangement holds up given this is not something markets haven’t been accustomed to in well over a decade.

  28. Ben Sargent says:

    Slow process and yes I’m sure there are different employment numbers from different sources.
    No telling in the big picture how jobs are counted and staffed. Just today I met a displaced couple from Kyiv Ukraine. They live in Ukraine with home and car. He is a Texan and she Ukrainian.
    Displaced voluntarily because they could with Dad and daughter having US passports.
    He works for a California company providing tech network software support from 9-5 pacific time from Ukraine and now Texas. His wife is a global project manager for a European company and is working from home as well.
    They will return to their home and vehicles once things cool down.
    I would assume these types of workers are counted by the company but don’t know.
    When I worked overseas I was counted as a USA employee. One month CPI on data points don’t make a trend line as pointed out by Wolf nothing goes in a straight line.

  29. harry hv says:

    Wolf if you base your analysis on the official figures you’ll be barking up the wrong tree. The BLS has reported unemployment down, but employment also down, huh? Did a lot of perople die? From Mishtalk :”In March, the BLS said full-time employment was 132,718,000. Today it says 132,577,00. Again we see huge divergences between the two reports.”

    Yes it’s clear there are plenty of help wanted ads but it’s mostly a shortage of sub-poverty-line workers to fry greasy meals for the waddling masses.

    Dont believe everything you read

    • Halibut says:

      Yeah, I’ve often wondered why Wolf doesn’t just personally do door to door surveys of all households in all U.S. territories.

    • Wolf Richter says:

      harry hv,

      Mish has been saying every month, year after year, that the employment reports are fake, that the jobs are fake, that the numbers are fake, etc., etc. and it has been BS all the way along, and it gets really tiring after a while. Don’t drag this stuff into here. Leave it over there.

  30. Jon says:

    Total nonfarm jobs in July actually fell by 385k. All the growth being reported comes from seasonal adjustments.

    • Wolf Richter says:


      Duh!!! I just discovered sex?

      Yes, because employment in the summer is VERY seasonal. EVERY YEAR THE SAME WAY. So the seasonality is known and well established and it’s easy to adjust for it so that you can compare July to June. Without seasonal adjustments, you CANNOT compare July to June; you can only compare July 2022 to July 2021.

  31. PonderingPA says:

    I think the main one is daycare costs. It will cost us almost $16,000 to have our daughter in daycare from September to May this year, and feeling grateful since our other kid is finally old enough to go to public school or else we’d be paying double. And so many of my peers got disillusioned about working during Covid pay cuts and work load increases. There was that meme all my friends with babies and in some of the disillusioned Millennial parenting teacher groups were sharing: ‘I do not seek a career. I do not dream of labor.” A lot of teachers just quit these past couple years. After all, even if you do work, the government still has a ridiculously low cap on the employer dependent care accounts at only $5000 of childcare costs being eligible as non taxed income. So it does not make much financial sense to work a job or to have kids, and definitely not in conjunction or you are probably in the red.

    Probably the best life recipe (none of which I have done) would be to just marry rich, get your spouse’s parents or befriend some random rich person to gift you the downpayment for a house, maybe have a dog instead of children, and then put whatever is remaining of the inheritance into the stock market to grow so that when you’re old you can pay a nursing aide to help.

    • El Katz says:


      Childcare was an issue even in the 1980’s. We made the decision for my wife (who was a high school English teacher) to remain home to raise them because her working would have been a net loser. We simly made do with less “stuff” and figured it out. Side hustles flipping cars saved the day.

      We received a small inheritance from my parents after the kids were out of the house. I gave it to my children for use as for down payment on homes. Wasn’t that much, really, but it opened the door for them. Today, that amount wouldn’t buy a nice car.

      Both of my kids went the dog route. (Well, one with cats) They seem happy (or less miserable – depends on how one defines “happy”).

      • Pondering PA says:

        That’s super generous of you to help your kids!

        My parents were given a house in S California back in the 80s which is now worth several million. My dad, who was a lawyer who worked on the Prop 13 laws in CA that (I think?) have made it harder for the next generation to live there, then got his mother to co-sign a loan and give the downpayment (antagonizing all his siblings) to buy him an even bigger house in Orange County. He’s now retired and buying his third or fourth Mercedes and a BMW, and my mom has been traveling somewhere in Europe this summer, LOL.

        I am glad they are enjoying their wealth, but I just sort of close my ears and tune it out when they express sadness over their children and our children/their grandchildren not living anywhere close on the West Coast; and I ignore all my parents’ Reaganite theories on “hard work” and trickle-down etc. They are sweet people, but just really clueless about how the world works for us kids’ generation who did not received the sort of help they did for college or housing, yet faced much higher college costs and housing costs. But whatever, I think my generation’s experience is more the norm in human history. So my only hope is just that they don’t blow all their wealth on toys and trips here in their 60s and then expect us kids to somehow float them financially in their older age when they are 80 and the money’s run out or something.

        My goal is just to keep looking ahead and keep my immediate family and children afloat. Right now, admittedly it doesn’t make a whole lot sense for us both (pastor and teacher) to be working since we pay much more in daycare tuitions than makes sense on our low incomes, but our thinking is the careers/jobs are long-term income while the $$$ daycare is hopefully just a few rough years.

  32. dang says:

    ” Knuckling under this raging inflation will likely require a recession, yet a shallow recession might not be enough to get the job done as this inflation is getting more and more entrenched.” The quote from your excellent article that says what I think, probably.

    Inflation destroys the financial basis of probably 95% of the population, in the end. I think, for what it’s worth, the Fed’s go slow approach doesn’t seem to be working. It almost seems to be a slap to the integrity of the Federal Reserve Bank of the United States.

    The Fed might consider a surprise 50 basis point rise in the FFR before the annual Fed confab in wyo.

    • dang says:

      The next generation is now firmly in control of the present, even if they don’t know that they are the largest contingent of potential voters in domestic history.

      I watched a fabulous series on N****** about Woodstock 99 and I came away with their mantra ringing in my ears:

      Fuck You; we aren’t going to do what you tell us.

      Now they’re responsible people who are facing the economic realities of life. Let’s see what they do with they’re time in the lime light.

      I apologize for growing up in a propaganda system that tried to convince me that hating and fighting the commies
      who now provide our daily bread. How dare, a US Speaker of the House tour the factories supplying the US with chips.

      • dang says:

        China’s arrogance has become palpable. Pelosi has every right to visit Asia.

        The only ones in a huff are the Chinese Communist Party (CCP) that coordinates the industrial gulag that the merchant class hired to compete with American workers.

    • dang says:

      I think that the Fed’s go slow approach is entrenching the inflationary mind set, making dislodging it significantly more painful. The Fed should not be pussy footing with 9 pct inflation.

      The robust employment report indicates that the economy has become divorced from the threat of unemployment. The demand for labor in the US is robust.

      • Thunder says:

        Bank of England – Interest rates rise to 1.75% – the biggest jump in 27 years – as BoE warns UK faces long recession as high gas prices hit households and warns UK to enter recession with inflation to pass 13% .
        Jeremy may be late and slow but he is not comatose like the BOE and even worse ECB.
        What is inevitable, is unavoidable and inflation is like a cancer and is now metastasizing World wide.
        A short sharp recession is the urgent surgery needed. I for one would welcome one.

    • The Real Tony says:

      The real problem is in a wage price spiral wages never catch up to the inflation rate so wage earners always lose.

  33. El Katz says:

    It’s not a lack of immigration, it’s a lack of qualified immigrants with skills beyond that of a mow-blow crew.

  34. Finster says:

    A Pavolovian response of buying stocks just because of a “Fed pivot” would be misplaced anyway. When do you suppose the Fed started cutting rates in 2008?

    In September 2007! Stock prices didn’t even peak until October 2007, let alone bottom. If you loaded up on stocks based on the Fed beginning a rate cutting cycle, you would have been catastrophically early.

  35. CrazyIvan says:

    Last hot print

  36. SocalJimObjects says:

    These so called Recession Mongers are trying to suck in every last sucker into the market. Why? They didn’t sell quick enough when the market started its dip i.e. they too missed the boat. Muppets though are still flush with moolah.

  37. Franz Beckenbauer says:

    Looking at the 10 year treasury rate TNX one might be inclined to see a long-term cup&handle formation with the breakout from the handle coinciding with the incredibly strong jobs numbers.

    Usually that’s a strong breakout to the upside.

  38. Kenny Logouts says:

    It’s still rock and hard place.

    Inflation is great for corporate profits, but once inflation is embedded at 5-10% then your salary costs will go through the roof.

    And if you don’t raise salaries consumption falling fast will cause a recession.

    There is now no way out. It’s just when and how fast it happens.

    A soft landing would be like throwing a dart from space and hitting the bullseye on a dartboard.
    It’s not going to happen.

    • John says:

      The federal minimum wage for covered nonexempt employees is $7.25 per hour.

      2022 Hourly Minimum Wage
      $7.25 / hour
      Weekly Minimum Wage1
      $290.00 / 40-hr week
      Yearly Minimum Wage2
      $15,080.00 / year
      The Federal minimum wage was last changed in 2008, when it was raised $0.70 from $6.55 to $7.25.

      Guessing inflation will never catch up here

    • The Real Tony says:

      The people driving those earnings are losing about 10 percent every year. Wages are increasing at 6 percent, real inflation is16 percent. Earnings in the real world have to fall unless wages catch up to the real inflation rate

  39. Idiot Allergy says:

    One thing nobody talks about re: the recession mongers. Why are earth would you be begging for recession in the hopes the fed will pivot when those inflated stocks will be worth nothing when our currency collapses under the weight of hyper-inflation. Which is assured if the fed pivots

  40. Kurtismayfield says:


    Thank you for your article and analysis as always. One thing that you did not mention is the prime age labor participation rate. That is still above a ten year trend, and signals that perhaps our problem is demographics/culture changes more than anything?

    I know you don’t enjoy links, so its at 82.4% currently.. above ten year trends, but below the dot com boom (Which I don’t think we will ever see again at 84.4%)

    Thanks for writing!

  41. CreditGB says:

    Funny how the 5 million who increased the not in the “not in the labor force” in the past 2 years, have yet to emerge from their basements in any meaningful numbers. These used to be referred to as deadbeats. Please spare me your outrage, it is what it is, and can’t be “redefined”.

    I suspect that “new jobs” and “hiring” will remain even or may climb a tad until those deadbeats are forced back in the labor force. At some point, the increasing numbers of planned layoffs in recent weeks is going to cross the line of returning workers. That is when the masked recession is going to slap the economists right in the kisser with some reality, way too late for any emergency policy shifting to save the economy.

    I say look at middle incomers, the drivers of economic activity, the spenders on goods and services. Those driver’s funds are being squeezed into fewer and fewer, and only essential, goods and services, and they are curtailing spending elsewhere. Production has to be cut along with employees, such as what we are starting to see in some announced labor cut backs and layoffs.

    I hope that I am dead wrong on this but concerned that it is the path we’re on and more useless and excess spending of the tax dollars now is only driving the coming recession ever deeper.

  42. David W. Young says:

    There are so many graphs or metrics here that have not returned to the pre-pandemic trend. But the Fed will take this alleged “strong labor market report” and continue to hike 50 to 75 basis points at 2022 meetings, because this set of tea leaves is implying that inflationary pressures via labor are getting hotter and hotter; inadequate, yes, but turning skyward. Or certainly hotter than they have for decades.

    Even as non-farm payrolls hit a new record, the labor participation rate is stuck at 60% ish, worker productivity is sagging, and potential/qualified/literate workers continue to drop out of the work force. So the national income account is capped or topping because a paycheck is a paycheck and the total amount of income available for spending is constrained as a result. Still not impressed, but I stated early in the year that I felt that we were already in recession as of March and I still hold that view. Don’t give a donkey’s patuee what the apparatchiks declare in Washington, just ask the man or woman on the street what they think about the economy when many are barely making ends meet.

    Look at Consumer Confidence. Setting new lows. Americans may
    be putting on brave faces as they continue to take on debt, but they ain’t really feeling that good about doing it. The percentage increase, month to month, in credit card debt, just hit a new record last print. That ain’t healthy, and shows one last drink before the bar closes.

    This is a grossly distorted labor market yielding grossly distorted statistics. Shutdowns due to Covid and resultant supply chain freeze-ups have caused people to hunker down from a personal contact basis and that includes showing up to an office possibly surrounded by infected co-workers. The work-from-home trend is certainly not universally efficient, healthcare workers come to mind as would firefighters and policemen. When becoming employed has too much baggage associated with it, and you can take advantage of subsidies such as Inflation Compensation at the State level, you just stay unemployed.

    The Establishments vs. Households employed counts may be showing us something of a trend change. Many of the self-employed and newly minted entrepreneurs are finding out how hard it really is to start and sustain an adequate income-producing business. Doing your own thing sounds great as a soundbite, but sustaining oneself solely through your own efforts results in at least a 40% failure rate. A steady paycheck is looking better and better to some of these individual; nice try, but no cigar.

    I don’t look for a Fed Pivot from Friday’s surprisingly strong labor report because it will actually allow them the political breathing room to raise rates another 75% in September. Plus, I would not be surprised if the Fed does not raise rates intra-meeting in late August by 25 to 50 basis points because the bond market is starting to do their raising for them as inflation continues to rage. The Fed looks bad and not just a little foolish in this whole tightening extravaganza. Kind of like the Little Dutch Boy using just two pinkies to plug a dike that looks like Swiss Cheese, it has so many gaping holes in it.

    The Dollar’s recent surge toward 106 on the DXY is starting to falter. Why invest in U.S. assets when the U.S. Government continues to ignore the Debt Monster riding into town along with the Inflation Genie. I can see the Default Dude mounting up on the horizon in the private sector. No end to Federal largess with another mega-spending bill ready to pop out of the oven in Washington probably next week. Out of control U.S. spending via Debt, Debt, and more Debt, eventually the house of cards collapses.

    So our exporting of inflation with a surging Dollar is about to become an importing of inflation by a softening Dollar while we import our way to Debtor’s Prison. Charles Dickens would not be amused.

    • Steve says:

      Very good. Keep your eyes on the for rent signs as the renters buckle and the last leg holding up all these ponzied assets gets pulled out.

    • CreditGB says:

      Bad times breed good businessmen. Good times breed bad businessmen.

      We are coming to the end of a record stretch of “good times” spanning a generation and there are virtually no good businessmen left to serve as guides through the misery that is now forming.

      Please don’t refer to our “leaders” they are the worst of it, simply Middle School Intellectuals screwing up all they touch.

    • David W. Young says:

      In case anyone gets this far down the Comments portion of the page: At the risk of getting a lightning bolt down from Mount Wolfstreet, here is a link to the FRED chart of Unemployment Rates going all the way back to January 1, 1948 to present with recession periods shown in gray shading:

      Note how the rates almost consistently hit lows just or shortly before the finally recognized onset of an economic Recession; these revelations can take several quarters of ponderance until they are declared from Up High. Sound familiar.

      Plus, there is lots more of discussion online about the divergence in trendlines from the Establishment vs. Household jobs data that has persisted since this past March. Something is rotten in Denmark, or at least convoluted.

  43. BenW says:

    No “real” recession is looming. The labor, services, rental, & consumer discretionary are all too high. What the neutral FFR is six months from now is anyone’s guess. I don’t see the Fed raising rates before September. Now, what does the stock market do? Keep climbing after next week’s CPI report most likely shows June was peak?

  44. Finster says:

    “All kinds of logical reasons are being cited that work together: The difficulty and expense in finding daycare…”

    This is more an artifact of how we count employment than of the real economy. If a parent stays home to provide child care, it’s not counted as being employed, but if someone else does the same work, it’s counted as additional worker.

    It’s misleading since the same amount of productive work is being done either way, but one way is counted and the other is not.

    • 91B20 1stCav (AUS) says:

      Finster-good observation, applicable to home elder care, as well. (Another facet of our nation’s labor market transitioning from the general sufficiency of a one-earner household to a general two-earner necessity post-WWII into the ’70’s. (Labor losing general value by the increase of a paid-labor force that was primarily/traditionally male pre-WWII…).

      (Ladies, please spare the brickbats! my last comment is only about the arithmetic of gross numbers of available workers increasing to a point which gutted most workers’ compensation leverage until (?) now-not negative about women’s capability in the workplace, the very real gender ‘glass-ceiling’ and compensation rate issues, etc.).

      may we all find a better day.

    • Pondering PA says:

      But assuming the parents have somebody else raising the child so that they themselves can both work jobs… then isn’t that another job? Mom is employed and nanny/daycare worker is employed — so there is an additional job being worked somewhere in the economy vs. if mom (or dad) stayed home and did that 1 job?

      • 91B20 1stCav (AUS) says:

        Pondering-the questions here might be: “who pays that?”, “who can afford to pay that?” and “what are actually graspible unemployment numbers when there are ‘eight million stories in the Naked City’?”…

        may we all find a better day.

  45. Texanalways says:

    My daughter is pregnant with her 2nd and the last child planned. Daycare for a newborn is $1800 her 4-year-old is $1200. I will move in to provide daycare for the newborn until the 4-year-old starts school. I do not work and suddenly became a young widow 5 years ago. I am fortunate I can help financially and in person as I now get to draw my husband’s 2 pensions and survivors social security at the highest level. I know many women my age helping care for grandchildren.

    • Pondering PA says:

      You are very generous to do that. It is a great gift to your daughters family. It is unfortunate that for families to survive financially and practically today, they basically need the labor of three adults to make it… two parents working plus a nanny/grandma/daycare teacher.

  46. historicus says:

    Isnt this emplyment report the one that typically has huge revisions?

  47. ooe says:

    The IRs has reported more money comming in from withholdings that means more jobs are being created and the fiscal deficits are comming down. That means more tax money is comming in due profits and more people working.
    The simple explanation is that we have negative productivity and the Robots are not taking over. Companies are not investing in plant & equipmet as we were falsly promised by the Trumpists to pass their tax cuts.

  48. SpencerG says:

    Rooting for an inflationary recession? Have the money managers of Wall Street lost their minds? I get that not everyone remembers the “Stagflation” of the late-70s… but have they never even heard about it?

    Maybe if we talk slowly they will hear us…

    “High Unemployment… AND Inflation… did NOT stop… the Volcker Fed… from raising… interest rates.”

    • dang says:

      Yes, but, I think his method and motivation are under critical review.

      Some would argue that Carter’s acceptance of Volker’s draconion moves cost him the election, by a whisker, and issued in Reagan and, perhaps, neo-liberalism.

      • dang says:

        I find my self focusing on the current news, which, illogically, makes me feel good, all the while suspecting, what horse manure.

        The USG would lie to me ? I don’t think so, unless it has fallen under a worse situation of corruption than the period of 1850 or so, the Civil War, Americans against American. Bloody and inconclusive, according to some.

        • dang says:

          My current forecast of what I’m likely to face from the bite of QT which is scheduled to take full force in September.

          The monthly deflation of the Fed balance sheet which includes the $ 5 T of fat they’re attempting to trim, deflating the three asset price bubbles that QE bequeathed, simultaneously, seems idyllic, but improbable, that it won’t get ugly.

        • dang says:

          The white, rain heavy cloud, forming over the desert, reminds me of how insignicant I am. As the economic sunami, that lays before us engulfs us in a reactionary mind set, we can prepare ourselves through the most enduring of human traits, common sense.

  49. TimCNY says:

    Corporations are contributing to negative productivity growth which is now translating into permanent higher unit labor costs.
    Job openings are mainly in low skilled positions and are being filled by very low skilled workers who are getting paid significantly more than justified by their contributions.
    Maybe one third of job opening are for jobs requiring higher education and experience. Liberal arts degrees won’t qualify for STEM type jobs so they remain underserved.
    One retiree can’t be replaced by two entry level newbies. Yet corporations across the board did just that. Look at the pilot shortages.

    We find ourselves in a situation similar to the former Soviet Union where unemployment was near zero but many “employed” produced nothing. Stories like men employed in tractor factories who worked for years without shipping a single completed tractor due to parts shortage, spoiled inventory, etc.

    The uncertainty of government policies is also holding back business. Look at the under-investment in oil and gas. Democrats openly state they want O&G (and coal) companies to go out of business. The results are now self evident.

    • Wolf Richter says:

      “The results are now self evident.”

      concerning your last line: Oil and gas companies are now making record profits. The US is the largest natural gas producer in the word, and now one of the largest LNG exporters. The US has also become the largest petroleum and petroleum products producer in the world, bigger than Saudi Arabia and Russia. Democrats’ fault, I assume, no?

  50. AV8R says:

    Not a recession monger but the end of week selling of T”s further inverting the 2 – 10 to .40 and 2 consecutive quarters of – GDP growth suggest it.

    It will be difficult for the Powell Fed to “pull off” anything with the investor class so stubbornly pulling against in an attempt to front run the pivot.

    Something will break soon.

  51. Isaac S. says:

    you know about that saying: there are lies, damn lied, and then there are ‘statistics’? That should have been the opening quote of your article.

    The only reason employment report printed a good number is b/c people were forced to take on multiple jobs just to pay bills. This, combined credit card debt sharply rising lately and gasoline demand & prices dropping, is further strong evidence that the US economy is already deep into Stagflation. You see how reality keeps coming my way wrt your fabled ‘doom loop’. The smart money sees the writing on the wall, EU+China+Japan+EM/ROW going into deep recession will immediately result in ‘risk off’ trades, and all this hot ‘inflation mindset’ spending in the US (fueled further by the recent bear market rally) plus $1-2T more Gov. stimulus spending starting this year into next, will cause *much* more hot spending that Papa Powell is going to have to crush with not only higher rates but much more aggressive QT. The Fed is already doing it’s best to mop up liquidity with record reverse repo rates/volumes, and that still is doing nothing to reduce the ‘hot money’ driving markets and inflation. It is going to get ugly by this Fall/Winter. I’m raising more cash with profit taking. I’m near 30% cash now. What is your cash position? You have not updated us about that lately. That will tell us how contrarian you really are, or not. I’m waiting for your coming article titled “Eye of the storm…” GLTY! Look out below…

    • Wolf Richter says:

      I’m short the market. Lots of cash (short-term Treasuries, etc.).

      Tightening is going to rip into the market apart. And inflation is going to rip into corporate profits directly and indirectly. A strong labor market and still positive real consumer spending growth has so far provided additional fuel for inflation, in addition to the monetary fuel, and this will keep the Fed on track to tighten further, and much more than anyone expects.

      That’s what people need to understand: this strong labor market and still positive real consumer spending growth is BAD for stocks and bonds.

      People are hoping that the Fed will pivot because there is some kind of negative GDP or whatever, but the Fed won’t pivot until inflation is coming down in a real way.

      And a pivot means the Fed stops raising rates but won’t cut rates. They will remain higher for longer than anyone expects. This inflation is the real thing. And they have understood this now. This is bad for stocks and bonds.

      It might still pivot too soon, and inflation starts raging all over again, which it did in the early 1980s. That’s the worst-case scenario for stocks and bonds. Because the second time around, the Fed is going to try to crush inflation once and for all.

      The last inflation bout of this type lasted for over a decade, from the early 1970s to the early 1980s. And this one is going to serve up a lot of bad surprises too.

      • Isaac S. says:

        @Wolf, thx for detailed reply.

        While a see the structural bearish set up pretty much as you do, I don’t have the guts to short the market b/c there is way too much cheap money- investors % cash at some of the highest historic level. So, I’m soft-shorting the market by raising cash w/ profit taking, selling big run ups, esp. on my weak positions. The Fed is very behind the curve with still cheap money given 3% money and 6+% inflation will feed on itself to keep assets inflated.

        Do you have any opinion about the Shiller P/E? most all I’ve read says it is historically one of the best correction risk metrics. If you like it, would be nice to see your analysis/use of it in an article.

        See data plots:

        excerpt from an online source:

        Without beating around the bush, anytime the S&P 500’s Shiller P/E ratio has crossed above and sustained 30, bad things have happened. Although ease-of-access to information has improved dramatically over the past quarter of a century due to the internet, and investors are, therefore, willing to accept higher valuation premiums, the Shiller P/E has a perfect track record of calling bear markets dating all the way back to 1870.

        In these 152 years of recordkeeping, there have been only five bull market rallies that took the S&P 500’s Shiller P/E above 30 on a sustained basis. Following the peak of each of these bull markets, the S&P 500 went on to lose anywhere from 20% to 89% of its value. While a Great Depression-like 89% loss is almost certainly out of the question today due to fiscal and monetary measures, a bear market decline has been the minimum expectation when valuations get extended.

        The silver lining is that the S&P 500 has already entered a bear market, with an aforementioned peak decline of 24%. However, the Shiller P/E ratio remains at an elevated reading of 31.17, as of Aug. 3, 2022. History would suggest this valuation premium needs to fall reasonably below 30 for the market to find a bottom.

  52. Cookdoggie says:

    My mid 50’s friend is one who took his massive capital gains and quit the work force back in 2020. He also upgraded his boat to a 58’ yacht and we enjoyed a nice trip to the islands on it this week. All those boat and RV sales the last two years have to be similar stories, funded by cap gains and/or PPP.

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