Employment Growth Stalls in July

By SBE Council at 2 August, 2024, 11:42 am

By Raymond J. Keating -

The Federal Reserve has been on a misguided quest to fight inflation by slowing the economy (an economy, by the way, that hasn't grown with real strength in some 18 years) via higher interest rates. Meanwhile, Congress and the White House have made matters worse through, for example, increased regulation, more government spending, protectionist trade policies, and uncertainty on where taxes are headed.

Given this mess, it's incredible what entrepreneurs, businesses, workers and investors have managed to accomplish. The U.S. economy has moved forward due to their resilience.

At the same time, there have been clear negatives due to policymakers inflicting policy harm - with real annual GDP growth averaging 1.8 percent from 2007 to 2023, and in 2024, with real GDP growing by 1.4 percent in the first quarter and 2.8 percent in the second quarter. For perspective, real growth average 3.5 percent (including recession years, incidentally) post-WWII to 2006.

The latest question on the economy comes via the new employment report from the U.S. Bureau of Labor Statistics. In effect, employment growth stalled in July. And both surveys included in the BLS report were in agreement.

First, the establishment survey estimated that nonfarm payroll employment was up by only 114,000 in June.

Second, the household survey, which better captures small business and startup activity, pointed to growth of a mere 67,000 - not much more than statistical noise.

The one positive from the household survey was that the labor force increased by 420,000 in July, which accounted for the unemployment rate increasing from 4.1 percent in June to 4.3 percent in July.

Entrepreneurs, businesses, workers and investors could sure use some help from policymakers. That's not a call for foolish subsidies, industrial policy or protectionism; but instead, it's about the need for sound policies focused on tax and regulatory relief, free trade, restrained government spending, and monetary policy focused on price stability.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II:52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.

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