What's going on?

Data out on Friday showed that the US added fewer jobs than expected last month, and companies are getting to a point where they�ll take what they can get.

What does this mean?

The US has beaten economists� expectations for the last two months, but clearly it couldn�t handle the mounting pressure: the country posted 431,000 new jobs last month � some way shy of the 490,000 economists were expecting. And while that�s nothing to be sniffed at, there are still almost twice as many job openings as there are job seekers.

Still, let�s look at the bigger picture: the US added nearly 1.7 million jobs last quarter, which puts economists� expectations to shame. What�s more, the proportion of people in or looking for work � known as the �labor force participation rate� � is back to within a hair�s breadth of pre-pandemic levels.

Why should I care?

The bigger picture: We�re spiraling.
Desperate times call for desperate measures: a near-record 49% of small US businesses raised salaries in March in an effort to fill their vacant roles, helping push the average hourly pay up 5.6% from the same time last year. Thing is, businesses will probably just pass those higher costs back onto customers by raising prices, and that potential �wage price spiral� could push up inflation and put more even pressure on the economy as a whole.

For markets: A recession is nearly inevitable.
Investors are worried that Friday�s strong data will encourage the Federal Reserve to push ahead with plans to raise interest rates multiple times this year, potentially even with bigger increases than the typical 0.25%. And since investors are aware of the short-term damage that could do to economic growth, they�re flocking to longer-term assets like 10-year bonds. In fact, demand for them pushed their yields lower than those of 2-year bonds on Friday. That �inversion� is as rare as it is foreboding: it�s historically been a sign of an imminent recession.