Unemployment news may signal difficult inflation fight: CEI analysis

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The jobs report for July shows an addition of 114,000 jobs to the economy, pushing unemployment to 4.3 percent. A cooled off labor market may indicate a harder fight against inflation.

CEI Senior Economist Ryan Young:

"Today's unemployment news could be bad news for inflation.

"The Federal Reserve already said this week that it would be paying more attention to the labor market, which is often a prelude to inflation-causing stimulus. Today's news gives them more ammo.

"A 4.3 percentunemployment rate is pretty good by historical standards. But unemployment is still rising, and it may not be done yet. If policymakers overreact to the news, they could spark more inflation, slow growth, and cause more long-term unemployment. That is a bigger risk than the news itself."

CEI Research Fellow Sean Higgins:

"Friday's report that the economy added 114,000 jobs in July, well below forecasts and pushing the official unemployment rate up to 4.3 percent, is a clear indicator that employers are pulling back on hiring. The once-hot labor market has finally chilled.

"Employers have tried everything they can think of to address labor shortages, from increasing pay (up 8 cents in the last month) to allowing more flexible work scheduling and have simply hit a wall in terms of what else they do to get the skilled people they need. The labor force participation rate has barely budged in the last six months."