The share of adults reporting lost pay or income ticked up from 11% in June to 11.7% in July, Morning Consult said.
“The US labor market remains strong, but its best days may now be in the rearview mirror,” John Leer, chief economist at the agency, said in a news release on the report. “With the Fed raising interest rates aggressively to combat high inflation, businesses are slowing hiring and expansion plans, releasing steam from a red-hot labor market. Whether that slowdown is swift and severe enough to tip the economy into a recession remains to be seen.”
Unemployment reached a record high of 14.8% in April 2020, with the loss of some 20 million jobs in the aftermath of the coronavirus breakout. Jobs recovery has been strong since, with the unemployment rate staying at 3.6% since April this year, below the 4% defined by the Federal Reserve as “maximum employment.”
Morning Consult said its data on pay loss, drawn from 20,000 surveys per week conducted through July, was in strong positive correlation with initial US unemployment claims that have moved higher in recent weeks.
Breaking down the data, Morning Consult said lower-income households bore the brunt of the lost pay. As of the week ending July 23, 13.9% of adults from households earning less than $50,000 reported losing pay in the previous week, an increase of 1.3 percentage points from a series low at the beginning of June. Lost pay has also been concentrated in certain sectors, including leisure and hospitality and construction.
The US Labor Department is due to release on Friday the monthly nonfarm payrolls report for July. The nonfarm payrolls report has beaten forecasts for the past three months, with economists forecasting a 250,000-jobs growth for July over June’s 372,000.
US jobless claims, meanwhile, hit the highest level since January last week, according to weekly Labor Department data. Claims came in at 256,000 during the week ended July 23, the first time they have done so since the week to January 22.