Recession fears grow after jobs report falls short of expectations, stocks plummet

RALEIGH, N.C. (WTVD) -- A weaker-than-expected jobs report sent stocks tumbling Friday, as the new unemployment rate of 4.3% hit its highest mark since October 2021.

According to the U.S. Bureau of Labor Statistics, employers added 114,000 jobs in July, short of expectations of 185,000 added jobs.

"This feels like the beginning of a recession," said Dr. John Coleman, a Professor at the Duke Fuqua School of Business.

The hiring figures are a marked drop from the June report, in which employers added 206,000 jobs.

"The pattern that I see is a gradual rise in the unemployment rate over the past roughly a year. So this is not just a one-month blip. It's been rising from 3.5% or so about a year ago," said Coleman.

The Dow fell 610 points, the S&P dropped by 100 points, and the NASDAQ plummeted by about 418 points, as a mini rally in the latter part of the day chipped away at some of the morning's losses.

"The last two days have been a bloodbath in the stock market precisely because (investors) fear that the economy may be maybe headed into a recession,
said Coleman.

"The stock market is just taking it on the chin today. But the bond market is having one of the best days it's had in years. And it's it's really rallied. That's an anticipation that the Fed is going to be more aggressive in cutting rates," said Gregory Brown, a Research Fellow at the Fred Hawks Kenan Institute of Private Enterprise.

Brown highlighted several industries that continued to see hiring gains.

"I don't think the jobs report was really all that bad. If you look at the headline number, again, below expectations, but consistent with an economy that's still growing. And if you look inside in terms of where the job gains and losses were, there were really very few places that were job losses," Brown said. "The market was expecting manufacturing to lose jobs in July, (it) actually gained a small amount of jobs. There were healthy gains in health care and leisure and government. Even construction, which is a very economically sensitive sector, showed pretty decent gains in July. I don't think just looking at the actual industry data suggests that there is any kind of red flags. There's no alarm bells going off in terms of the employment levels. It's really just a question of what the future is going to bring and if this is a significant softening or whether it's just going to be a leveling off at a new level."

The Federal Reserve, which is set to hold its next meeting in September, has been cautious in its decision-making as part of an effort to cool inflation rates.

"As recently as just a couple of weeks ago, the market was expecting the Fed to cut rates by about 1% over the next year. Now that's up to about a 2% cut," said Brown.

"We're seeing more people looking for work, but at the end of the day, there's still a labor shortage," said Ken Hagler, a Branch Manager at Express Employment Professionals in Raleigh.

Last month, the company issued a report finding that 60% of US hiring managers planned to increase the number of employees in the second half of 2024, though only 15% planned to do so significantly. For those searching for work, Hagler encouraged them to follow up on job applications and engage in social networking.

"Get creative and think about 'what have I done in the past that aligns with that job,' and tailor your resume to show those soft skills," Hagler explained.

Hagler said the company has seen an increase in both employers searching for workers and prospective employees.

"Employers that are willing to to ride it out and train (workers), pay attention to these soft skills. Is this a person that possesses the skills to do this job? And if they do, put the time into it. I think sometimes we feel like we're too busy for that. But it's it's very valuable. It's going to build an employee that's willing to stay with you. You're building loyalty and that's going to help with turnover," said Hagler.