top of page

Explaining Rising Unemployment, the ‘Soft Landing,’ and Hopeful Rate Cuts

American unemployment has risen to 4.1%, the highest since November 2021, when we first adjusted to COVID-19 regulations (November 2021 was directly after the labor market recovered from the massive spike in unemployment). For additional comparison, 4.1% was the same rate in December 2017, which was a 13-year low at the time. This may incline you to believe that the current unemployment rate isn’t a cause for genuine concern, yet we have seen a steady increase in unemployment month over month this year. 

With a job market seemingly under duress, the Federal Reserve may cut interest rates to inspire market growth. This would counter the ‘soft landing’ approach the U.S. has been enacting in the face of global economic upheaval. ‘Soft landing’ is simply a term used to describe the state of forcing the control of inflation by slowing the growth of the markets (an example of this forced slowing would be maintaining high interest rates). However, it may be necessary for the Federal Reserve to relax these measures to combat the current lack of job availability/hiring slows. 

From the most recent June ‘Employment Situation’ report from the Bureau of Labor Statistics, job losses were mostly in retail, such as furniture, home furnishing, electronics, and appliance retailers - while warehouse clubs, supercenters, and merchandise retailers gained jobs. Additionally, there was a drop in employment for professional and business services, classified “temporary help services” (firms that provide temporary staffing solutions to other businesses). Professional, scientific, and technical services trended upward. 

From the above mentioned report (on page 7) it is uncertain if undocumented immigrants were factored into survey results, as workers surveyed are not required to verify citizenship. The report even goes so far as to say, “It is likely that both surveys include at least some undocumented immigrants. However, neither the establishment nor the household survey is designed to identify workers' legal status.”

Some economists think the rise in unemployment is business as usual. This is rationalized by the ‘soft landing’ approach, where pain points were foreseen as necessary shifts to regulate the economy. That may mean that the current unemployment rate is within the bounds of the Federal Reserve and that rate cuts may not actually come in September. If that were to be the case the Federal Reserve would seek to reduce inflation growth with manageable unemployment. 


bottom of page