(NEW YORK) — As recession fears grow, officials on Wall Street and in Washington, D.C., will be watching employment data on Friday to see if aggressive borrowing cost increases from the Federal Reserve have slowed a monthslong stretch of robust U.S. hiring — suggesting economic activity may be quieting down.

The jobs report is expected to show that U.S. employers hired 273,000 workers last month, a marked slowdown in payrolls from the 390,000 jobs added during the month prior, according to a survey from Bloomberg. The survey predicts that the unemployment rate will remain at 3.6%.

The new data arrives at a precarious moment. Across the economy, acute financial distress could grow as the Fed pursues a series of rate hikes that aim to dial back sky-high inflation but risks tipping the economy into a recession. At its most recent meeting, last month, the Fed raised its benchmark interest rate 0.75%, its largest rate increase since 1994.

“It’s amazing how head-spinning the predictions of the economy have been,” said Teresa Ghilarducci, a labor economist at The New School for Social Resarch. “Inflation was the top issue before the Fed met last month and now it’s recession,” she added.

Heightening the sense of economic uncertainty, the S&P 500 suffered its worst first-half performance of any year since 1970, falling 20.5%. The tech-heavy Nasdaq fell even further over that period, dropping more than 28%.

Economic data released this week presented a mixed picture of the job market. Employers posted 11.3 million job openings in May, a dropoff from the peak of 11.8 million in March but far higher than pre-pandemic levels, the Bureau of Labor Statistics reported on Wednesday. The statistics indicate that demand for workers dipped but remained strong in May.

On the other hand, data released by the Labor Department on Thursday showed that jobless claims stood at 235,000 last week, an increase of 4,000 from the week prior and the highest seen since mid-January. The data suggests that the tight labor market may be loosening, a possible sign of an economic slowdown.

Ghilarducci, the labor economist, cautioned that the persistence of a low unemployment rate in June may not mean that the economy remains in good shape, since the unemployment rate often lags behind overall economic trends.

“The unemployment rate is a note from a different time,” she said.

Still, the White House and the Federal Reserve will be watching closely to see if the data reveals anything about their difficult tight-rope walk of fighting sky-high prices by slowing down demand, while simultaneously avoiding the type of steep slowdown that could cause a recession.

In recent months, strong hiring has turned the monthly jobs report into a recurring indicator of the hot U.S. labor market.

Prior to May, the U.S. enjoyed a streak of 12 straight months in which it added at least 400,000 jobs. Meanwhile, for the past three months of jobs data — from March to May — the unemployment rate has stood at 3.6%, a tick above the 3.5% unemployment rate that the U.S. saw in February 2020.

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