Stock market takes tumble after disappointing jobs report. But some say there’s a silver lining

BETHLEHEM, Pa. – A jobs report was a shock for many.

A disappointing 114,000 jobs were added in July, according to new numbers out from the Bureau of Labor. The unemployment rate jumped to 4.3%, as well. This all brings an end to months of over-performing jobs numbers.

“There is a trade-off. You can’t see interest rates being this high for that long and not expect that to fight the wheel of the economy,” said economist Ahmed Rahman, with Lehigh University.

Rahman says this might actually be good news wrapped up in a bad package.

The new data suggest rate hikes have finally started to do their job.

“I think there was concern that the economy was still sort of in an over-heated environment,” Rahman said.

The rise in unemployment has triggered what’s known as the “Sahm Rule,” which can predict the economy is in an early recession when the average unemployment rate is at least a half-percentage point higher than the 12-month low.

However, the creator of the rule has said it could falsely trigger coming out of the pandemic.

“It’s a lot more people are searching for work as opposed to getting laid off or losing their work,” Rahman said.

“The labor force participation rate also ticked up from this report.”

This past Wednesday, the Federal Reserve chose to hold its key interest rate at about 5.5%, but signaled cuts could be coming in September.