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The current U.S. economy continues to be unpredictable, and that trend was reflected in July’s job number, which took everyone by surprise. Despite all signs that July would be a modest month for job creation, which has anticipated nearly all the recent labor surprises from the Bureau of Labor Statistics—no one told U.S. businesses, which exceeded all expectations by adding 528,000 jobs last month. Still it may not be a surprise to see the July employment figure revised downward in the coming months.

Here is what we know so far as we continue to dive into the data in the coming weeks:

1. Are we at full employment? Simply put, there are just not enough people to fill job vacancies. Plus, changing workforce demographics—not the pandemic—continue to fuel the shortage of people.

1. Unemployment and overtime. It is very possible we end up slipping into a “job-full” recession, which would be the first of its kind, as the unemployment rate dipped slightly to 3.5%. However, as demand for services slows, we expect people to work less overtime and take on fewer shifts. Only then would we expect to see more widespread layoffs. Right now, there are so many more jobs available than there are people to take them that any drop in demand is alleviating the intense pressure on short-staffed teams rather than increasing the risk of a layoff.

1. Staffing corrections may continue in some sectors. Some industries, such as technology and finance, may continue to announce layoffs or take action to slow down the rate at which they are filling open positions in anticipation of slower times.
   1. Widespread layoffs are not anticipated. While we continue to monitor this, we do not anticipate layoffs, except for specific industries like the aforementioned sectors.

   Strong job creation combined with signs of a traditional recession (like declining GDP) reinforce the unprecedented economic environment that we are in today. As NPR reported following the release of the jobs report, “the strength of the job market is in contrast with other economic indicators.” CNBC echoed this sentiment, looking at more than 70 years of economic data to show the unusual state of the economy.

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