Economic Setback: Weak Job Growth
Job Growth of 114,000 in July, Unemployment Jumps
According to data released by the Department of Labor on Friday, employers in the US hired 114,000 new employees in July, resulting in a spike in the unemployment rate to 4.3 percent.
An unemployment rate of 4.1 percent and 180,000 jobs were what economists had predicted.
The unexpected increase in unemployment and the underwhelming payroll growth speak to the possibility that the economy is about to enter a recession.
The three-month average is now 50 basis points higher than the lowest three-month average over the previous 12 months due to the 4.3 percent unemployment rate. This is known as theSahm Rule- which historically has signaled the start of a recession.
On Wednesday, Fed Chairman Jerome Powell stated that while recessions usually occur after the Sahm rule is activated, this is not a guarantee.
Payrolls for individuals were up just 97,000.
The average hourly salary increased by 0.2 percent, less than the 0.3 percent that economists had predicted. The average hourly wage has increased by 3.6 percent from a year ago, which is less than the 3.8 percent gain that was seen last month and the lowest advance since May 2021. The typical workweek decreased slightly from 34.3 hours to 34.2 hours.
The "market now fully understands that the Fed may be late in starting its cutting cycle," Queens College's Mohamad El-Erian said in an interview with Bloomberg TV. Read the article
Dramatic Surge in Car Repos: What's Behind the Spike?
The United States' private debt issue is starting to show signs of strain as car repossessions increased by 23% in the first half of 2024. The number of Americans whose cars will be repossessed by banks before the year ends is 1.6 million, according to data. This represents a little increase from the 1.5 million cars repossessed in 2023 and a sharp increase from the 1.1 million cars repossessed in 2021.
Naturally, supply chain shortages, loan rate increases, and inflation have all contributed to a sharp increase in the price of buying an automobile. The American public simply cannot afford new cars, and auto dealerships are unable to encourage sales. This year, the US new automobile inventory increased by 36%, nearly reaching levels seen in February 2021, before to the supply chain issue that impacted imports. However, a new car's average list price is $49,096—much more than the average American can afford. The average time a new car spends on a dealer's lot is 65 days, a rise of 41% every year.
According to Cox Automotive, the trend of car repossessions will continue until 2025. 1.7 million vehicles are being reclaimed. US household debt as of the first quarter of 2024 was $1.77 trillion, of which $12.44 trillion was mortgage debt, $1.62 trillion was vehicle loan, $1.12 trillion was credit card debt, and $543 billion was in other debt. Unrecoverable debt of an astounding $4,139,000,000 was recently reported by Bank of America, Citigroup, Goldman Sachs, and other firms.
