Jobs Are Up, Morale Is Down: What’s Really Going On in the U.S. Economy

Something unusual is happening in the U.S. economy, and most people can’t quite put their finger on it. The May jobs report showed 172,000 new jobs added, nearly double what economists expected. And yet consumer sentiment just hit a record low. 

This week on the HerMoney podcast, Jean Chatzky sat down with Sarah Foster, personal finance reporter at Bloomberg, to make sense of what’s really going on beneath the surface of the U.S. economy right now. They dug into the May jobs report, the hidden connection between the frozen job market and the frozen housing market, and what women who are 10 years away or less from retirement should actually be doing with their money right now.

The Jobs Report Doesn’t Tell the Whole Story

Three straight months of stronger-than-expected hiring sounds like good news. And to some extent, it is. But dig into the data, and a more complicated picture emerges.

“If you are employed, if you have a job, you’re experiencing that historically low 4.3% unemployment rate,” Foster explained. “But if you are trying to find a position, it feels like a recession-like economy.”

The hiring rate, or the share of workers actually getting hired, is still lower than it was before the pandemic, sitting around 3.5%. Historically, Foster notes, you only see a hiring rate that low when unemployment is closer to 7%. One in four people who are currently unemployed have been out of work for six months or more.

In other words: the U.S. economy is adding jobs, but it’s not creating opportunities.

Your Paycheck Is Losing Ground — Here’s What to Do

Average hourly earnings rose just 3.4% over the past year — the slowest pace in four years and inflation is running closer to 4%. In real terms, that means your paycheck is shrinking even if you got a raise this year. 

And it just got worse. Foster points out that inflation has now crossed a threshold we haven’t seen since 2023: prices are rising faster not just than wages, but also faster than the yield you can get on a high-yield savings account. That means the money sitting on the sidelines is actively losing purchasing power.

“If you are someone who just puts your paycheck in a brick-and-mortar bank, keeps it in your checking account, keeps it in a savings account, you’re slowly going broke right now,” Foster said plainly.

Her prescription: invest your money. Even small amounts in a low-cost index fund compound over time the same way a savings account would, except with far better long-term returns. She’s particularly passionate about this for women, noting that the gender pay gap makes investing not just smart but essential.

“Investing is the number one best way that you can make sure that you close that gap,” she says.

If you don’t already have a high-yield savings account, open one now. It won’t fully solve the inflation problem, but it’s one of the easiest and most impactful moves you can make today.

3 Moves to Make Right Now, Whatever the U.S. Economy Does Next

No matter where you are in your career or how close you are to retirement, Foster recommends three concrete steps:

1. Boost your employability. Find ways to sharpen your quantitative skills: a certification, a class, or even just learning a new Excel function. The more specific and marketable your skill set, the better positioned you’ll be for promotions, pivots, and the job search if you need it.
2. Don’t lifestyle-creep your raise. If you get a bonus or a pay increase, try to keep your spending where it was. Put the extra toward your Roth IRA, a savings account, or a low-cost index fund. Those small amounts compound.
3. Open a high-yield savings account. It’s one of the easiest, most impactful moves you can make — especially right now, as inflation rises and your checking account loses value.

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