The "breakeven" job creation level - an under-the-radar statistic indicating the number of jobs needed to be added each month to halt rising unemployment - is suddenly carrying significant weight in economic discussions. This number matters especially in light of recent disappointing labor reports revealing slowed job growth through May-July.
Just a few years ago, in 2024, this breakeven unemployment number was six figures; now, it could be as low as 10,000 to 40,000, according to researchers at Brookings Institution and the American Enterprise Institute. For context, the U.S. economy has seen an average increase of 147k jobs per month over the past decade, making the 73k jobs added in July look concerning.
The precipitous drop in the breakeven number is partly attributable to President Donald Trump's stringent immigration policies, which have reduced the entry and presence of immigrants seeking employment, thus lowering the number of jobs needed to keep the unemployment rate stable.
This breakeven figure is crucial in assessing the health of the economy and more so for Federal Reserve policymakers wrestling with decisions on interest rates - whether to cut to stimulate job market or to keep them high as a shield against inflation.
Federal Reserve Chair, Jerome Powell, may address the topic in the upcoming Jackson Hole economic conference. Powell had said last month, "Demand for workers in the form of payroll jobs-that number has come down, but so has the breakeven number, kind of in tandem. That puts the labor market in balance."