July's jobs report beat expectations, showing the U.S. economy added 528,000 jobs last month, versus the 258,000 expected. The report defies other signals that the economy is and could slow down further. But even as the labor market is strong, some demographics struggle to secure jobs.  William M. Rodgers III, Vice President and Director of the Institute for Economic Equity at the Federal Reserve Bank of St. Louis, joins Closing Bell to discuss July's report, why job equity is still up in the air, wage growth, and more.

Closing Bell

U.S. Economy Adds 528,000 Jobs in July, Beating Estimates, But Some Demographics Left Behind

Welcome back to cheddar News is closing bell. Everyone, I'm Kristen schueler down here on the floor of the stock exchange and july's jobs report was a big one, Much better than expected with the economy adding 528,000 jobs last month. More than doubling, estimates of around 258,000. Well, meanwhile unemployment taking slightly lower now sitting at 3.5% and the numbers defined other signals that U. S. Economic growth is slowing, but still some vulnerable demographic groups continue to struggle to secure a job. So joining me now is William Bill Rogers, vice president and director of the Institute for Economic Equity at the Federal Reserve Bank of ST louis Bill, Thanks for coming on the show, much better than expected report as we've been discussing all our, what does this report indicate about the state of the jobs market and the economy? Well, as we are one month away from celebrating Labour Day 2022, this report continues to confirm that the labor market is the strongest feature of the of our economy. Uh And I just wanna, before I continue, I just want to make sure that your audience knows that what I'm sharing are my thoughts and not or they do not reflect the policies or guidance or views um of of the Bank of ST louis but also more broadly um the Federal Reserve System. Um And then also it's nice about this report is that it helps to helps me to preview um my Labor Day, a message that will come out in about a month and that is a we still have robust job creation there. The uh there was upward revisions in previous months as you said earlier, the unemployment rate ticked down a little And then and then the wage increases I'm not so worried about because when you look over a month to month, the wage growth was rather modest and that you're over month of a little more than 5% in growth. That was largely due to increases in the minimum wage by states over the last year. So all in all, it's a very good report, strong report and I'm and I'm in and I'm in that camp to believe that this, that we're not in a recession. You have to look at the National Bureau of Economic Research is approach where they're looking at 10 to 15 different indicators on which they based their decision as opposed to just 11, number 11 statistic. Let's talk about, let's talk about inflation here for a moment. We did see wage growth in this latest report. We can pull up that full screen again to see where exactly wage growth landed from the same time a year ago based on these wage gain numbers, do you think that that is leading to higher inflation will continue to fuel higher inflation or these wage numbers looking temperate enough to you that we could start to see that headline number on consumer prices start to come down. Well, the sources of the inflation that the consumers that your viewers have been experiencing are not largely due to wage increases. The timing of this really takes you back to some people will focus on the stimulus package being too big in terms of the kind of supports that were provided to american families. Others will also focus on what's happening in Ukraine. Others will focus on uh china and and the creation of the problems with with getting product to to their markets, uh and and also energy. So so all of those issues predate the the the increased uh sort of demands or requests by organized labor to see their wage increases. And as my colleague Bill Spriggs at the A. F. L. C. I. O. At Howard University has talked about this morning and one of his notes, The wage growth over a month to month in these large in these sectors that we're growth had the largest growth was very modest, but those ways. But the wage growth for those industries, leisure, hospitality, year over, that's what's driving that 5% number that in wage growth that you're seeing. And I believe and I believe and agree with bill that that's probably largely being driven by increasing the minimum wage for a very small segment of workers. So I can't see how that's going. bleed into the broader price inflation that we've been seeing. So let's turn back to the overall economy wage gains on an annual basis, But for some of these lower income earning roles and positions as you just outlined their bill, but a much better than expected labor market in terms of the games that we saw, Does this indicate to you that the U. S. Economy could avoid a recession at least for another few months? That's a great question. I mean, there are three views out there. There's a view by chris Waller, one of my colleagues here in the system where he's arguing that we can see and we've been seeing job openings fall over the last few months. But he argues that as long as we're able to reduce the inefficiencies, Associate with job search, so that is improving women's parents access to child care, that we can continue to see unemployment rates stay low. Another view is by Larry Summers and his colleagues or livia blanchard where they're appealing to historical evidence and saying with these drops in falls or declines and job openings in heavily, We're going to see unemployment rate unemployment rise. And then the third view is if you believe that rule of thumb notion that two quarters of consecutive decline in GDP gross domestic product, we're in a recession, then people will say, hey, we're already there. We're just seeing the unwinding of the economy. I have some work that I've been doing that tends to be more consistent with what uh with with what chris Waller is finding and and that in order for us to make sure that we don't go into recession or we have a softer land, We need to be more proactive in terms of helping families and individuals and their members getting back into the labor force and staying into the labor force. That is the openings are going to continue to fall. But as long as we are proactive about how we help families and individuals all right, get into employment, then we have a have a greater greater shot or a better shot of having a softer landing bill and really being out of a recession. I do have another question. My final one here because we are a bit tight on time, but an important one is vulnerable groups of african american unemployment. Hispanic unemployment asian unemployment, What does this report tell us about? Um their ability to find and maintain good work in this economy? Well, what it shows is that even when you have one of the tightest labor markets, uh these groups still have unemployment rates that are higher, they still have labor force participation rates that are lower. And we, as a society have to continue to work to to remove those structural barriers to work that make it harder for them to compete. And that's again, some of the work that I've been doing that because I said is consistent with what chris Waller is finding and those are the groups that we look at is to say, oh gosh, if we're going to really stay out of recession, stay out of a hard landing. We have to make sure we're doing the good work of helping these groups get back into the labor force and stay in the labor force. All right. Bill Rogers, vice president and director of the Institute for Economic Equity at the Federal Reserve Bank of ST Louis Bill, thanks so much for coming on.