The US job market has cooled down, how will this affect the economy?

The US job market is showing signs of slowing down after months of showing an unbreakable strength in the face of the rising interest rates.

US employers added 209,000 jobs in June, according to data collected by NPR. It's still a very substantial number, but it is smaller than what it had been in the past months.

The US job market proved to be most resilient in May. Despite not reaching 2022's digits, the number of new jobs created that month shows the market is growing. But that is not always good.

Three hundred thirty-nine thousand new jobs were created in May, well above the 290,000 in April and almost double what experts had predicted, given the state of the economy.

The job market slowing down is a sign that might stop defying the Federal Reserve's efforts to cool down the economy. If it doesn't, it could create a perfect inflationary storm.

The Federal Reserve has attempted to cool down the economy by increasing interest rates, which affect the price of debt in the US: mortgages, credit cards, car payments, etc.

The institution had done this ten times in a row until it announced in March that it would stop for a while to see the effects.

Raising interest rates is a common tactic to fight inflation, a major global economic problem since the pandemic. By making credit more expensive, the organization hopes to disincentivize spending.

In May employers started feeling the effects of the interest rates. According to The Guardian, a report from the staffing firm Challenger, Gray & Christmas showed that layoffs in May were 20% higher.

Julia Pollak, chief economist at ZipRecruiter, told CNBC that even with employers in that position, workers still had many possibilities to move smoothly through the job market in June.

Employees have "higher worker leverage, better outside opportunities, an easier time exchanging jobs," Julia Pollak said.

Another aspect of the data, which NPR highlighted, is that employers keep raising wages monthly. In June, they were increasing at an annual rate of 4.4%

That increase can be counterproductive. It puts more money in the hands of consumers. It incentivizes spending, which could make the Fed's effort to reduce inflation useless.

If people have more disposable income to spend and demand rises, prices will do so as well. That means that inflation will grow.

But there is also a positive way to look at the job market growth. It shows how resilient the US economy is and clears doubt about a recession soon.

Preston Caldwell, chief US economist at Morningstar, told CNN the data means that the economy "perhaps is growing at a healthy pace."

Inflation is also slowly decreasing. At its peak, in June 2022, it was 9%, but in June 2023, it was 3%, according to the New York Times.

Still, it is over the Federal Reserve target rate of 2%. Some experts cited by The New York Times believe that the effects of higher rates will show soon, with good and bad consequences.