Powell's dream of taming inflation by bringing down job vacancies has turned into a nightmare of an overheating labor market.
The U.S. economy had far more vacant jobs at the end of July than economists expected, indicating that the Federal Reserve’s interest rate increases have not yet cooled the labor market.
Economists had been expecting 10.4 million openings, which would have been a decline of nearly 300,000 from June. The Fed has been raising its interest rate target in an effort to tame inflation, which has been running at the highest rate in four-decades. Fed chairman Jerome Powell has said that bringing down the level of openings could help ease the tighteness of the labor market without necessarily raising unemployment by that much
The recent data shows that the U.S. economy is not on that path. In July, 528,000 workers were added to payrolls and the unemployment level dropped to 3.5 percent. The number of unemployed fell in July to 5.67 million. That puts the ratio of vacancies to unemployed just under two to one, nearly tied with the all-time record hit in march.
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