Moody's Talks - Inside Economics On An Economic Tight Rope
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Aug 1, 2025 Dante DeAntonio, Senior Director of Economic Research at Moody's Analytics, dives deep into today's challenging labor market and economic landscape. He discusses the troubling inflation trends and their impact on the Federal Reserve’s policy decisions. The conversation explores discrepancies in job data, particularly how new graduates are struggling to find work. DeAntonio also analyzes insights from a predictive model on recession probabilities while emphasizing the growing uncertainty surrounding employment trends and consumer confidence.
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Severe Job Growth Revisions
- Recent job growth revisions show average monthly gain is just 35,000, down dramatically from earlier estimates.
- Job growth is now highly concentrated in healthcare, with most other sectors stagnant or declining.
Labor Force Decline Signals Weakness
- Household survey shows employment declined by 260,000 and labor force participation fell to 62.2%, lowest since late 2022.
- Labor force size is smaller now than at the start of the year, indicating negative labor force growth pressures.
Unemployment Rate Masks Labor Market Slack
- The unemployment rate stays low due to shrinking labor force, masking true labor market weakness.
- With no labor force growth, even zero job growth represents a tight labor market with inflation risks.