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United States Recession Might Happen as Jobs Go Up While Wages Go Low and Purchasing Power Lowers

US Economy

As opposed to suggesting that the job market is expanding at a healthy rate, as some claim, it exhibits a hint of the United States recession.


Don’t let the supposedly encouraging employment statistics leading up to Labor Day weekend deceive you as hints of United States recession show up.

Yes, the U.S. economy created 187,000 new jobs in August 2023, above the predictions of the majority of economists and growing faster than the revised 157,000 job growth in July.

Yes, though there is a possibility of a United States recession, advances were observed throughout the majority of industries, with the addition of 97,300 jobs in the health care and social support sector, 40,000 jobs in leisure and hospitality, 22,000 jobs in construction, and 16,000 jobs in general manufacturing.

The number of jobs increased, and the unemployment rate did too, rising modestly by 0.3% from July to 3.8%. Additionally, the average hourly wage rose by just 0.2% in a single month, to US$33.82, or a meager 8 cents.

The financial crisis of 2008–2009 that lead to a United States recession, commonly known as the Great Recession, was significant for both its severity and duration. U.S. The GDP decreased 4.3% from its peak at the end of 2007 to its trough in the middle of 2009.

The fact that overall job growth was slightly faster than anticipated does not indicate that the economy is picking up steam or that inflation will soon soar once more, but lets us see a hint for another United States recession.

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The job expansion mainly emphasizes how challenging it is to forecast month-to-month variation.

Economics is frequently referred to as “the dismal science” for a good reason; we aren’t always very adept at predicting what will happen in the near future – be it escalation of the country’s economy, or another United States recession.

Certainly, monthly data can be used to inform judgments and guide policy. However, as the data can be highly unstable, concentrating on just one month can be misleading so it cannot be told already that a United States recession is really coming.

What matters more are the underlying patterns. And that’s where a United States recession as a result of economic slowdown is noticeable.

In 2022, the labor force was insufficient to meet the demand for labor as shown by job openings plus nonfarm employment. In other words, there were more available positions than there were applicants.

The economy is still not completely out of the woods in terms of the possibility of a United States recession.

It is true that inflation is declining. However, earnings have historically expanded less quickly than inflation, which has reduced consumers’ spending power.

It doesn’t seem that consumers have less money to spend on things just yet. Consumer expenditure increased 1.9% over the prior year in the first seven months of 2023.

However, there is proof that a significant portion of this was brought on by customers using credit. In the second quarter of 2023, the astonishing amount of credit card debt was $1.3 trillion.

The beginning of 2024, following the customary holiday buying splurge, is when a United States recession is most likely to happen. But luckily, a significant contraction is unlikely because of the Fed’s recent initiatives to slow the economy gradually.

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