Over the summer months of June, July, and August, economic data was mixed, once again raising questions around the durability of growth and the possibility of an impending recession. The July jobs report showed a material weakening in the pace of employment growth and a rise in the unemployment rate to a local peak of 4.3%. The weak jobs report was shortly followed by the largest negative annual benchmark revision since 2009, resulting in lower estimates for 2023 and early 2024 employment growth. While the August jobs report did show an improvement over July, employment growth was still well below its pace from earlier in the year.
Elsewhere in the economy, the news has been more favorable. Consumer spending remains solid, manufacturing activity is up from the January lows, and the Federal Reserve has shifted its policy stance towards lowering interest rates. A strong September employment situation report also eased fears as job growth accelerated again and positive revisions to previous months muted some of July and August’s apparent weakness.
In this briefing, we discuss developments in the data across key segments of the economy, how those developments have impacted the economic outlook, and what it means for workers compensation.
Key Themes and Takeaways
- The labor market slowed meaningfully over the summer months before picking back up in September. Going forward, we expect more volatility in employment growth and a modest hiring pace, warranting a slightly more cautious outlook.
- The broader economy remains in good shape. The labor market patterns we see now do not imply that a recession is coming soon, but they do reflect heightened sensitivity to any potential future shocks.
- The Federal Reserve has shifted its policy stance to be less restrictive in order to support the labor market and address economic vulnerabilities. The recent strengthening of labor market data is unlikely to deter the Fed from reducing rates further.
Check out the full
Quarterly Economics Briefing to learn more.
You can also access the latest
Labor Market Insights for a monthly overview of key labor market statistics and what it means for workers compensation.
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Economics Team if you have questions or want to gain additional insights.
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