U.S. Economy Holds Momentum, Rising Costs Curb New Hiring

The U.S. economy’s largest sector continued to grow at a robust 1.6 % pace in July, but supply chain bottlenecks and a persistent 3.5 % inflation rate have increased business costs.

Rising Costs and Their Impact on Hiring

■Companies curtailed hiring, resulting in a 4 % decline in new hires in the first quarter of 2024.

■Inflation-driven spikes in energy and raw material prices rose by 2–3 %.

■The unemployment rate remained at 3.7 %, while demand in manufacturing and retail sectors grew.

Supply Chain Chinks and Dual‑Sided Effects

■Shortages of chips and key components cut tech firms’ sales forecasts by 1.8 %.

■Digital infrastructure investments slowed by 12 % due to higher rent and labor costs.

Market Repercussions

■The S&P 500 index slipped 0.8 % amid inflation expectations.

■Investors are re‑evaluating growth projections in light of potential rate hikes.

■Reinvestment decisions in major tech firms are delayed by about 6 %.

Market participants stress that policy and technology solutions are essential to sustainably reduce cost pressures. In this environment, labor productivity and automation investments could be the key to balancing growth momentum with cost control.