Against the Odds, the U.S. Economy Chugs Along, as Fears Linger

As fears of a recession persist but have yet to be realized, U.S. employers added 209,000 jobs in June, the Labor Department reported Friday. The unemployment rate was 3.6 percent, compared with 3.7 percent in May.

It was the 30th consecutive month of gains in American payrolls, but the June figure represented a continued cooling of the labor market. The total was down from a revised 306,000 in May and was the lowest since the streak began. The figures are seasonally adjusted.

“It’s not great news, but it’s good news,” said Rachel Sederberg, senior economist at Lightcast, a labor market analytics firm. “This is the slow contraction in numbers we wanted — it’s comforting to see.”

Wages, as measured by average hourly earnings for workers, grew more than expected, rising 0.4 percent from the previous month and 4.4 percent from June 2022. Those figures matched the May trend.

For a year or more, worries about an impending recession have dominated discussions about the U.S. economy. The Federal Reserve’s steady escalation of interest rate increases in the past year, aimed at tamping down inflation, caused shocks in the banking sector and halted the boom in the housing market.

But the dampening effect of higher rates has confronted the robust income and spending of many households and the staying power of businesses — both buttressed by emergency pandemic support from Congress and the Fed.

Ellen Zentner, the chief economist at Morgan Stanley, whose firm has been an outlier by not forecasting a recession in the past year, said the recent upturn in consumer sentiment could be connected to a “realization that the economy has been much more resilient to a sharp tightening in the stance of monetary policy than previously expected.”

But economists and financial analysts remain uncertain about the outlook.

“The environment of ‘pick the data point that supports your narrative’ persists,” said Oren Klachkin, lead U.S. economist at Oxford Economics.