The American jobs machine is still humming along, folks. June's employment report showed the economy added 147,000 new jobs—handily beating expectations of 110,000 and making a mockery of the perpetual recession predictions that have become something of a parlor game among economic forecasters.
I've been covering these monthly reports for years now, and I'm starting to think economists should just throw their models out the window. Thirty-six consecutive months of "resilience" suggests this isn't a fluke but a fundamental misreading of post-pandemic labor dynamics.
The government sector did the heavy lifting this time around, adding 73,000 jobs. State governments, particularly in education, went on a hiring spree. No surprise there—have you tried visiting a school lately? They're desperate for staff.
Healthcare, meanwhile, added another 39,000 positions. This sector's growth is about as surprising as finding out water is wet. Our population keeps aging, and those folks need care. Simple demographics at work.
What's really fascinating here isn't just the numbers themselves, but the persistent gap between what economists predict and what actually happens. Month after month, the consensus forecast calls for cooling that never materializes. It's like watching someone repeatedly walk into the same glass door, convinced that this time it'll be open.
"The labor market is definitely weakening," one prominent economist told me last month at a conference in Chicago. That was right before sipping his coffee and adding, "Just like it was definitely weakening last year." At least he had a sense of humor about being consistently wrong.
Look, there are legitimate reasons why traditional models keep missing the mark. For one thing, demographics—baby boomers retiring means constant job openings even without robust growth. For another, government spending remains elevated, creating demand that offsets monetary tightening.
The post-pandemic economy just doesn't behave like the textbooks say it should. Higher interest rates? Check. Above-target inflation? Check. Weakening labor market? Nope, still waiting on that one.
That's not to say there aren't warning signs if you squint hard enough. The report noted federal government employment has dropped by 69,000 since January's peak. And certain sectors are showing strain. Manufacturing, for instance, remains stuck in neutral.
And then there's the policy uncertainty hanging over everything. Tariffs, trade restrictions, immigration changes—all these could throw sand in the gears. Employers hate uncertainty more than they hate taxes, and that's saying something.
The market reaction was predictable as sunrise. The dollar strengthened as traders scaled back their rate-cut fantasies. Bond yields ticked up. It's the financial equivalent of Lucy yanking the football away from Charlie Brown for the umpteenth time.
For Jerome Powell and the Fed, this creates a genuine dilemma. They've been trying to cool the economy without breaking it—a so-called "soft landing." But what if the economy refuses to even acknowledge the landing gear is down?
"The Fed would prefer some modest cooling in the labor market," explained Sarah Jenkins, chief economist at Capital Research Group (and my former college classmate, full disclosure). "Not a collapse, just enough to ensure wage pressures don't reignite inflation."
The coming months will tell us whether this resilience is temporary or something more fundamental. Maybe—just maybe—productivity gains from technology are finally showing up in the data. Or perhaps fiscal policy is more powerful than we thought.
Either way, American workers can take comfort knowing that despite all the recession talk and financial media hand-wringing, companies still need to hire. That's great news for Main Street, even if it occasionally complicates Wall Street's rate-cut narrative.
Sometimes good news is just... good news. Even if it makes economists look silly.
