Every episode is different
My just so story is that the recession oddity is mainly due to inflation and getting goods, both intermediate and finished.
A 5% increase in wages is pretty weak after a year and a half of 8-10% inflation; that looks to me like a 3-5% drop in wages. Inflation, unusually, seems to be both due to massive spending/money printing by government and the huge drop in goods production and disruptions caused by the COVID reactions. Prices are going up because there is more money chasing fewer goods.
On the supply side, there are still big shortages in raw materials, intermediate goods and finished goods, with rationing based on things other than prices that are locked in by contract. My company has some lead times of at least a year, others I have seen up to two years. That is, if you order today you will get it July 2024. That isn't for high end, very complex finished goods either, but intermediates that were pretty standard 6 week lead time items. So we need the staff to run as hard as we can with what we can get, but we are paying out the nose for transport (flying stuff in some cases) and it is hand to mouth up and down the chain. No spare money for growth. If that holds true across manufacturing industries, then lots of zero growth due to just scraping by means there is little countering industries with negative growth. A recession due to not being able to get enough stuff to grow.
The employment situation may not as rosy as you paint it. The Great Immiseration grinds on. From May to June, the civilian labor force shrank by 353,000, from 164,376,000 to 164,023,000 and remains below its 164.6 million peak back in February 2020. And still the unemployment rate at 3.6 percent remains above its 3.5 percent low in 2020.
The labor force participation rate, at 62.2 percent, and the employment-population ratio,
at 59.9 percent, remain below their February 2020 values (63.4 percent and 61.2 percent, respectively).
The number of persons not in the labor force who currently want a job was 5.7 million in June, above the February 2020 level of 5.0 million.
Women and minorities remain hardest hit by inequities in labor force participation with 70 percent of white males participating, 57.1 percent of white females, 62.2 percent of Blacks, and 64.4 percent of Asians.
But worst of all seasonally adjusted real average hourly earnings for all employees decreased 1.0% from May to June and are down 3.6% from the same time last year. An analysis released last month by LendingClub finds that found 61% of U.S. consumers, approximately 157 million adults, were living paycheck to paycheck in April, and price increases have only escalated since then.
Quality of life for low-wage earners, of course, continues to be hammered, but even upper incomes are suffering. LendingClub’s reported that in April 2022, 36% of consumers earning $100,000 to $150,000, 31% earning $150,000 to $200,000, 26% earning $200,000 to $250,000 and 24% earning more than $250,000 were living paycheck to paycheck without issues paying their bills. Between 10% and 12% of consumers in these higher-income brackets lived paycheck to paycheck with issues paying their bills in April 2022. It has only gotten worse since and there is no improvement in sight.
Many pundits have focused on unemployment as being low and not flashing a recession signal. However, hasn't unemployment generally been a lagging indicator?
We really need a an NGDP futures market that the Fed could be guided by or even intervene is as its main policy instrument. Pending that Treasury should at least create lots more TIPS with intermediate tenors of 1,2,3,7.
‘… the economy added 372,000 new jobs in June…’
Did it? How does this square with a large number of people who have ‘disappeared’ from the workforce, and complaints by businesses that they are struggling to rebuild their workforce to pre-pandemic of government lunacy levels, and some like airlines/airports cancelling services due to lack of staff?