5 takeaways: Why the sunny jobs outlook defies a weakening economy

Inflation is raging. The stock market is tumbling and interest rates rising. American consumers are depressed and angry. Economists warn of potentially dark times ahead.

But employers? They just keep hiring.

The Labor Department reported Friday that America’s dinged and dented economy managed to add a vigorous 372,000 jobs in June, well above the 275,000 that economists had expected. And the unemployment rate remained at 3.6%, just a tick above the 50-year low that was recorded just before the coronavirus pandemic flattened the economy in early 2020.

“The labor market’s continued strength is simply astonishing, despite all the headwinds new hiring faces,” said Christopher Rupkey, chief economist at the research firm FWDBONDS LLC, dismissing concerns that the economy might headed for a downturn sometime soon. “This isn’t what a recession looks like.”

The American job market has staged a remarkable comeback from the depths of the COVID-19 recession in the spring of 2020: In March and April that year, the United States lost a staggering 22 million jobs.

But the government’s vast infusions of spending, including expanded unemployment benefits and relief checks to most households and ultra-low interest rates set by the Federal Reserve, fueled a propulsive recovery. Employers added a record 6.7 million jobs last year. And they’ve been tacking on an average of 457,000 a month more so far in 2022.

The nation is now just 524,00 jobs short of the number it had in February 2020, just before COVID erupted. Counting last month’s hiring, in fact, the private sector has regained all the jobs it lost to the pandemic recession. The remaining shortfall resides entirely on government payrolls.

The strong recovery does have a downside: It has fueled the hottest inflation in 40 years. And the Fed will likely see June’s hiring spree as another reason to keep aggressively raising its benchmark short-term interest rate as it did in March, May and June to try to tame inflation. Higher rates will probably weaken the economy because they will make loans steadily more expensive for consumers and businesses.

Here are five takeaways from the June jobs report: