The U.S. non-farm payroll data for July, released last Friday (August 2), came in below expectations, leading to a significant drop in stocks on Monday. Investors seem to believe that the U.S. labor market is on the brink of a tight spot.

However, this pessimistic view overlooks the unique dynamics of the U.S. labor market. Unless more U.S. companies, like Intel, conduct large-scale layoffs, the U.S. economy is not heading into a recession.

Data shows that the unemployment rate increased from 4.1% in June to 4.3%, but U.S. employers still added 114,000 jobs last month. Although this was below economists' expectations, it remains consistent with a healthy labor market. The employment rate for the prime working-age group (25-54 years) reached 80.9%, matching the highest level in more than twenty years.

The changes in the labor market have triggered the "Sam Rule," which suggests that when the three-month moving average of the unemployment rate rises at least 0.5 percentage points above the low point of the previous 12 months, it indicates that a recession has begun. The theory behind this rule is that a rising unemployment rate affects consumers' spending power, thereby triggering a vicious cycle of unemployment and economic contraction.

However, even Claudia Sam, the former U.S. Federal Reserve economist who proposed the rule, stated on Monday: "Based on our understanding of the U.S. economy, the likelihood of a recession at this point is very low," although she believes the central bank should have started cutting interest rates in July rather than September.

Additionally, Hurricane Barry, which struck the U.S. at the end of June, caused the largest power outage in Texas history due to a hurricane, with over 2.7 million households affected and more than 1 million households experiencing power interruptions lasting over ten days. This may have impacted the employment data.

The San Francisco Federal Reserve Bank estimates that after adjusting for these effects, employment growth should be between 130,000 and 150,000, significantly higher than the unadjusted 114,000.