The American job market is in sharp decline in the wake of recession fears, which is causing panic in every sector of the economy.
According to data from the US Labor Department, unemployment is rising as corporate heavyweights announce massive downsizing, amid their dwindling profits.
Unemployment Sharply Rising in America
In the week ending on July 30, 260,000 people applied for jobless aid, compared to the previous week when 254,000 people applied for it.
Though jobless claims are not the only sign of worry for the Biden administration. Reportedly, the hiring pace was also reduced by 2% in July. Employers are hesitant to offer long-term contracts to workers, due to the rising market uncertainty.
Jobless claims at 8-month high as layoffs edge higher https://t.co/KIyRROOQc3
— usa share news (@usasharenews) August 4, 2022
Both job openings and unemployment numbers are likely to worsen in the upcoming days. Next month, the Federal Reserve is expected to increase the interest rate further to tame chronic inflation, which will further reduce economic activity.
This year, the Fed already increased the interest rate four times. Fed officials are predicting yet another hike in the next meeting of the central bank.
According to the latest survey, job openings reduced by 0.6 million in June to reach their lowest number, 10.7 million, since September 2021.
Fed officials on Wednesday again expressed their determination to keep inflation under control, that a 50 basis point increase in the Fed's key interest rate next month could be enough to move toward that goal
— WeTrade (@WeTrade2022) August 4, 2022
Last Hope of Biden Administration Bites the Dust
The dwindling job market numbers come at a time when the Biden administration was relying on this metric to justify the consecutive, second, negative quarter of the GDP.
The top economic officials of the Biden administration recently tried to redefine a recession and they indicated even two consecutive negative GDP reports do not constitute a recession.
In doing so, the Biden administration mostly relied on the rising job market to defend its economic performance.
However, now all the economic indicators, including the GDP and job market, are in a downfall. However, the Biden administration is still hesitant to acknowledge the arrival of the recession.
Whereas economic experts and corporate stakeholders are not ready to buy the flawed narrative of the Biden administration anymore. Recently, different corporate giants announced a hiring break and massive layoffs in various sectors of the economy.
On Wednesday, Walmart announced it would restructure its business to cut down more than 200 job roles in different departments.
Likewise, financial giant Robinhood decided to cut its headcount by 23%, which will reduce the workforce of the company by 780 employees.
In the recent past, Tesla, Twitter, and Netflix already announced layoffs, while Facebook and Alphabet also decided to slow down their hiring.
Now, economists are waiting for the monthly jobs report for July, which the US Labor Department is scheduled to release on Friday.
Bureaucrats at the central bank are likely to delve deeper into the report to see the outcomes of the rapid interest rate hikes in recent months.