By Kristin Myers, Editor-in-Chief

What's Happening Today

Boom goes the dynamite, and apparently, also the jobs market. U.S. employers added 528,000 jobs to the economy in July, more than double the 258,000 jobs that economists had forecasted. The unemployment rate fell to 3.5% from 3.6%, the lowest level since February 2020, just before the pandemic hit. That means the labor market has now recovered from the pandemic—in less than three years. What's more, the pre-pandemic unemployment rate of 3.5% is the lowest since 1969.

So… what recession? Despite two consecutive quarters of declining gross domestic product (GDP), it's unlikely that the country is in a recession with the labor market not just going strong, but booming. That means workers have money in their pockets that they can use to go out and buy things, which stimulates the economy. Remember, 70% of the U.S. economy is based on consumer spending.

But if you've looked at the markets today, they aren't exactly jumping about the news, with the S&P 500, Nasdaq, and Dow on the decline. Why is that? Today's jobs report could be a case of "good news is bad news" for some, because investors are looking beyond this report and digesting what it could potentially mean in the future. And instead of celebrating the strength of the economy, they may be getting worried that this strong jobs report means the Federal Reserve will get even more aggressive with rate hikes as the central bank fights rising inflation.

The higher rates go, the more economic growth could be impacted, which means that corporations won't do as well. And there is of course, the increased likelihood of a recession, though this jobs report seems to make it clear that we likely aren't in one—at least for now.

- Kristin

Editors' Picks

What Recession? Economy Added 528,000 Jobs in July (The Balance)

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What a Rise in Interest Rates Means for Your Portfolio (The Balance)

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What Are Bonds and How Do They Work? (The Balance)

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Term of the Day

Labor Force Participation Rate

The labor force participation rate (LFPR) shows the number of people seeking work or working, expressed as a percentage of the total population, and it's calculated by taking the total labor force (employed plus unemployed) and dividing it by the total civilian noninstitutionalized population.

The employed is a group made up of the civilian noninstitutional population age 16 or older who in the last week worked at least an hour or more as paid employees. It also counts those who worked 15 hours or more as unpaid workers in a family-owned business or farm. Each worker is only counted once, even if they hold two or more jobs.

While today's jobs report came in strong in most respects, the labor force participation rate—the percentage of the population working or looking for a job—declined to 62.1% last month, its lowest in 2022 and well below the pre-pandemic rate of 63.4%.

Off the Charts

With July's job gains, the number of people working rose to its highest level ever, surpassing February 2020 for the first time since the pandemic hit.