Slowing Job Market, Slowing Growth?
August 07, 2024
The U.S. job market is exhibiting signs of slowing, as the unemployment rate has steadily increased over the past 18 months to 4.3%, its highest level since October 2021. Meanwhile, consumer confidence in job availability is the worst it has been since April 2021.
July’s weaker-than-expected jobs report, rising jobless claims, and softer manufacturing data are fueling investor concerns that the U.S. economy could be heading for a recession. Although we have been anticipating a slowdown in growth, our outlook does not include a recession because of the resilience of the U.S. consumer and robust earnings growth. For example, 82% of S&P 500 companies have reported their 2Q earnings, with the majority showing positive growth, which has so far resulted in a 12% year-over-year growth rate.
Ahead of the Federal Reserve’s September policy meeting, several announcements regarding labor, manufacturing, and consumer spending will help shed light on how much the economy is slowing. We will be watching closely to see if job market weakness translates into a decline in consumer spending. Not only are markets likely to remain choppy because August and September are historically volatile, but election years are typically more volatile as well. We remind investors that market retrenchments are normal, and it is best to stay invested.
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