The labor market has remained strong despite inflation's grip on the broader economy, with job openings far outpacing people seeking employment. A tighter job market could be a signal that the economy is slowing enough for the Fed to be less aggressive. It would also be a sign that inflation itself, particularly with wages, could be easing up.
“We need fewer job openings, which reduces the chances of bidding wars for talent and we’re starting to see that," said ” Jeff Buchbinder, equity strategist for LPL Financial.
It has been a strong jobs market, though, which helped counter worries that the economy is already in a recession. The economy has contracted for two straight quarters, which is a long-held informal definition of a recession, as spending eases. Economists and analysts have said that strong employment has helped shield the broader economy from slipping into a recession, or at least getting mired in a long recession with a deep impact.
“What we have right now doesn’t seem like (a recession)," said Fed chair Jerome Powell, after the central bank's most recent policy meeting in July. “And the real reason is that the labor market is just sending such a signal of economic strength that it makes you really question the GDP data.”